ORAL ANSWERS TO QUESTIONS

INTERNATIONAL DEVELOPMENT

The Secretary of State was asked—

Gaza

Christine Russell: What support the Government are providing to non-governmental organisations and charities that are delivering humanitarian aid to the people of Gaza.

Douglas Alexander: Since the start of the conflict, the United Kingdom Government have allocated almost £3.5 million directly to non-governmental organisations and charities, with staff and resources on the ground, to provide immediate relief such as safe drinking water, emergency medical treatment, health and hygiene-related items, shelter and emotional support to civilians affected by the conflict. In addition, £4 million has been committed to the International Committee of the Red Cross and £1 million has been committed to the United Nations humanitarian emergency response fund, to which non-governmental organisations and charities can apply.

Christine Russell: I thank my right hon. Friend for his reply; the news that our Government are responding positively in helping the agencies to rebuild the shattered lives of people in Gaza is certainly welcome. Many of my constituents have donated very generously to the Disasters Emergency Committee appeal. At a meeting last week, my constituents asked me what assurance we could give our aid agencies and NGOs that we will keep up the diplomatic pressure on Israel to make sure that there is free movement across the border crossings for the aid workers and the essential supplies that they are taking in.

Douglas Alexander: My hon. Friend's constituents in Chester share the concern widely felt across the United Kingdom that support should be provided to people who have suffered terribly in Gaza in recent weeks and months. I assure her and her constituents that we have been unstinting in our demand of the Israeli Government that there should be free and unfettered access not only for the aid, but for the humanitarian aid workers so that they can carry out their vital work.

David Simpson: What efforts is the Secretary of State making to ensure that help provided by this country with the intention of assisting the people of Gaza is not diverted by Hamas or any other group to attack Israel?

Douglas Alexander: Clearly, our overriding concern is to ensure that the humanitarian aid reaches those who need it; we would treat any diversion of aid extremely seriously. That is why we are already in dialogue with the United Nations Relief and Works Agency, the World Food Programme and other relevant agencies, which have long experience of working in the region, to ensure that all the aid provided through the generosity of the British public finds its way to those who so desperately need it.

Richard Burden: Given what my right hon. Friend has just said, does he share my concern at the latest report from the United Nations humanitarian co-ordinator? He complains not only that the crossings into Gaza remain closed for far too much of the time, but that Israel is still refusing entry to lists of priority items for humanitarian aid supplied by the UN. What representations are we making to Israel on the issue of making sure that specific items get to where they are needed?

Douglas Alexander: In recent days, our Prime Minister has written to Prime Minister Olmert reinforcing the consistent message from United Kingdom Government Ministers: that we want the free and unfettered access of which I spoke. I know of my hon. Friend's long-standing interest and commitment on these issues. Through his own expertise, he will be aware that the issue is not simply about the quantity of aid, but about the breadth of the kind of items allowed through the crossings at the moment. The UN estimates that at least 500 humanitarian aid trucks are needed daily for the pre-conflict requirements of the Gazan population and that, of the 4,000 types of relief item that it estimates are actually required, only 20 to 25 are getting in and out.

Malcolm Moss: Israel has set up a clinic at the Erez crossing on the Gaza border to give free medical treatment to Palestinians. However, no one is in the clinics because Hamas turns people away at the border. Are the Government aware that those clinics have been set up by Israel, and what steps will they make to ensure that Hamas allows people to take that free medical treatment?

Douglas Alexander: Of course we support any efforts made to ensure that those injured in the conflict receive the requisite treatment. There has also been provision whereby, for example, injured children have been taken across the Rafah crossing into Egypt. We have been clear; our policy has not changed in relation to all sides in the conflict—there should be free and unfettered access, so that humanitarian agencies of whatever origin can continue their work.
	At the same time, we recognise that ultimately there needs to be a political resolution to the basis of the conflict. That is why we welcome the fact that there has been early engagement from the Obama Administration in the United States; they have made early phone calls to the region and appointed Senator George Mitchell. We also support the efforts led by the Egyptian Government, as part of the international community, to try to take forward a process that will ultimately lead to the basis of a broader peace settlement being found. Ultimately, that is the best guarantor of humanitarian support.

Andrew Slaughter: Recent reports by the Palestinian Centre for Human Rights and other organisations based in Gaza show that on a day-to-day basis only a fraction of the aid that is needed, including food, construction materials and fuel, is getting in. If the Israeli authorities are prepared to allow this to happen, despite the shortages, what role does my right hon. Friend see for the UN or other independent agencies in ensuring that the crossings are open?

Douglas Alexander: My hon. Friend is right to recognise that there continue to be real difficulties in securing the required level of access. To give a sense to the House of the items that are currently being barred from entry to Gaza, they include school textbooks, PVC pipes for water and sanitation, plastic bags that the UN uses to distribute food aid, and equipment to store medical vaccines. That is why it is important that the whole international community is clear on the need for full and unfettered access. From a European Union point of view, there is, through the EU border assistance mission, a long-standing offer on the part of the EU to assist in creating the conditions in which a humanitarian corridor can effectively be established at the crossing, and that offer remains.

Michael Moore: Everybody across the House and the country has been utterly appalled by what they have seen happening in Gaza in recent weeks. There will be a broad welcome for the Secretary of State's commitments and pledges for aid and assistance, and for what I detect to be a harsher tone towards the Israeli Government than has been adopted in the past. Does he recognise that beyond the immediate priority of dealing with the humanitarian catastrophe in the aftermath of this horribly one-sided conflict, there must be a complete rethink of the way that the Quartet goes about development in the Palestinian territories? In particular, will he now accept that the Quartet's deliberate political isolation of the people of Gaza in recent years has been ruinous and counter-productive?

Douglas Alexander: I simply would not accept that characterisation of the Quartet's position. Only last week, I had the opportunity to meet the Quartet's envoy to the region, former Prime Minister Tony Blair, and discussed with him the level of ambition that he has for the people in Gaza as surely as for those on the west bank. Last Thursday, I met Abu Mazen, the President of the Palestinian Authority, and he made it clear to me that the United Kingdom, as part of the Quartet, has been one of the key funders of the Palestinian Authority, because, as he rightly argues, if we ultimately need to see a broader peace settlement in the middle east, it will be necessary for there to be a viable negotiating partner for Israel. That is why we continue to support efforts on the west bank and why we continue to support the efforts of the Palestinian Authority. We recognise that while humanitarian access is vital, ultimately it will be insufficient until we see the broader political moves of which the hon. Gentleman speaks.

Derek Wyatt: Israel has always controlled the entry into Gaza but not always the southern border with Egypt. It would be much better if we could have an official entry into Gaza from Egypt. What progress is being made on that score?

Douglas Alexander: The nature of the crossing into Egypt is different in the sense that if one compares, for example, the capacity at Rafah with that at Karni, there are fundamental differences. The Egyptian Government have taken a leading role in some of the political discussions prior to the declaration of a unilateral ceasefire and subsequently following that ceasefire. We welcome those steps. At the same time, attempts have been made to ensure, notwithstanding the very real constraints on all the border crossings, that humanitarian aid continues to enter Gaza. We expect that in the coming weeks there will be conference in Cairo that will provide a further opportunity for those matters to be discussed.

Andrew Mitchell: It is clear from my recent visit to the Gaza border that the work of the Department for International Development is widely respected both by Israeli Minister Herzog and Palestinian Prime Minister Fayyad. However, when I spoke to the UN agencies last night, they told me that still only a fraction of the 900,000 Gazans dependent on food aid were receiving it. Will the Secretary of State confirm that he is in daily contact with the United Nations Relief and Works Agency, which is so vital to all the humanitarian relief efforts, and to which he has allocated £4 million in the past few weeks?

Douglas Alexander: I am grateful to the hon. Gentleman for his gracious words in relation to the work of the Department and hope that they inform his other public comments on it in the months ahead. I can assure him that we are in regular contact with UNRWA. We have officials on the ground who are monitoring the situation, and as of yesterday morning, up to 200 humanitarian staff were on the list of people trying to enter Gaza. It is exactly that type of issue that we are discussing with the United Nations, as well as pressing the Israeli authorities on it.

Andrew Mitchell: We welcome the Secretary of State's announcement of a total of £27 million of humanitarian support for Gaza and note that he has so far allocated just over half of that. Could he clarify for the House when, where and how he intends to spend the remaining half of that money?

Douglas Alexander: That judgment will be based on the United Nations assessment, which has been carried out in recent days. Historically, there has been a difficulty whereby announcements have been made without allocations of funds following immediately. That is why on the very day that I announced the second tranche of British funds—the £20 million or so—I asked the Under-Secretary of State for International Development, my hon. Friend the Member for Worcester (Mr. Foster) to visit the region. He met the Social Affairs Minister, Minister Herzog, who also met the hon. Member for Sutton Coldfield (Mr. Mitchell) in recent days, and we are in the process of distributing the aid through British-based NGOs and the United Nations organisations, including the World Food Programme and UNRWA.

Mark Lazarowicz: My right hon. Friend was clear in his views on the scandalous refusal by the BBC to broadcast the appeal from the DEC. Now that the BBC has perhaps had time to reflect on the public anger that the refusal caused, and on the fact that there is still a clear need for that aid to get to Gaza, would my right hon. Friend urge the BBC to rethink its decision and to broadcast any appeal it wishes to promote on this matter?

Douglas Alexander: I do not think that the BBC is in any doubt as to my position on the merits of broadcasting the DEC appeal. While having been clear from the outset that the decision ultimately has to be reached by broadcasters, the scale of suffering and the unimpeachable integrity of organisations such as the British Red Cross made a powerful case for the British people to be made aware of the mechanisms by which they could make a contribution to the alleviation of suffering. The reports I have received from the DEC indicate that it has received a significant level of support from the British people. I welcome that and continue to encourage people to make a contribution to alleviating such suffering.

Afghanistan

Robert Goodwill: What progress has been made on the policy of incentivisation for growing crops other than opium poppy in Afghanistan.

Michael Foster: Progress is being made on promoting legal crop growing in Afghanistan. The number of poppy-free provinces has increased from three in 2006 to 13 in 2007, and to 18 in 2008. Poppy cultivation fell in 2008 by 19 per cent. across Afghanistan, and the percentage of agricultural land devoted to poppy growing has fallen to just 2 per cent.

Robert Goodwill: When I was in Helmand province last year, I was surprised to learn that the reason farmers grew poppy rather than other crops such as wheat was Taliban intimidation, rather than profitability—it is more profitable to grow wheat, particularly if free seed and input is provided. Will the Minister assure the House that there will be sufficient supplies of seed and input for farmers so that they can feel sufficiently secure to turn to more conventional crops?

Michael Foster: The hon. Gentleman is right to point out the challenges faced in Helmand province in allowing farmers to make the transition from poppy growing to legal crop growing, such as wheat. That is why our comprehensive approach involves greater security and enforcement of the rule of law. It is a matter of improving infrastructure, developing rural enterprise with micro-credit schemes and, importantly for farmers, allowing the freedom of movement of crops.

Andy Reed: Would my hon. Friend tell the House what steps he is taking to ensure that there is co-ordination between his Department and the Ministry of Defence to provide the level of security to which he referred? Is he clear, as others may well not be, on the role of the UK in Afghanistan, and on any exit plans it has, in the light of some discussions this week that suggest that we could be there for years while making little progress?

Michael Foster: My hon. Friend points out that there is an important role to play in co-ordinating military activity in Helmand with the reconstruction and economic regeneration that is so vital to the people of Afghanistan. That is why we have impressed upon Afghanistan the need to enforce the rule of law, which is done through our contacts with the MOD and military forces, and we have worked with Governor Mangal on the promotion of legal crop growing, such as the $11 million programme to invest in wheat seeds for 32,000 farmers in Helmand province.

Julian Lewis: Within the past few days, there have been reports of a rift developing between a senior American commander at NATO headquarters, who wants to go back to a more aggressive policy of eradication of poppy by force, and the senior American theatre commander who, rightly, wants to ensure that it is a matter of incentives not crude, counter-productive methods. Will the Minister and his colleagues do everything that they can to convey which side of the argument we are on to our American friends and allies?

Michael Foster: I am not aware of the specific discussions that the hon. Gentleman refers to, but there is an $11 million programme to incentivise farmers to move from poppy to wheat growing. DFID has supported it with some $8 million, and the United States Agency for International Development, the development body of the US Government, has contributed the remaining $3 million.

Zimbabwe

Ann Winterton: What recent discussions he has had with his overseas counterparts on developing a co-ordinated approach to the humanitarian situation in Zimbabwe.

Ivan Lewis: As a result of our funding, the World Health Organisation has been able to set up a control centre in Zimbabwe to ensure a co-ordinated response to the cholera outbreak. We are in daily contact with our donor colleagues, relevant UN organisations and international financial institutions to ensure a co-ordinated response to the wider humanitarian crisis and to prepare the way for recovery when the time is right.

Ann Winterton: Bearing in mind that Morgan Tsvangirai has just been sworn in as Prime Minister of Zimbabwe in what can only be described as a very imperfect deal, does the Minister believe that urgently needed humanitarian aid can be hastened? More than half the population rely on emergency food aid, and the cholera epidemic has already claimed about 3,500 lives.

Ivan Lewis: The hon. Lady makes an important point. We respect Morgan Tsvangirai's decision to assume the position of Prime Minister and take the Movement for Democratic Change into a power-sharing agreement. Equally, however, we will judge that agreement and the Government on their behaviour and conduct in the period ahead. Our job, currently and in the future, is to ensure that we get humanitarian aid to the people of Zimbabwe. We are providing £47 million for life-saving assistance, with £2 million more to come in the next few weeks. We have been leading the charge to ensure that we bring the cholera outbreak under control. We are having some success, but by no means has the cholera outbreak been resolved.

Malcolm Bruce: Does the Minister acknowledge that given the new situation in Zimbabwe, his Department will need to evaluate closely the opportunities that may arise to engage more fully in future? What steps will his Department take to co-ordinate with the neighbouring countries and to build a consolidated ability for local and international donors to ensure the rebuilding of the economy and the alleviation of poverty in Zimbabwe?

Ivan Lewis: May I tell the right hon. Gentleman that we are very clear about our view of the tests that should be applied to the conduct of the new power-sharing Government? Those tests must include the immediate release of political prisoners; an end to political violence and intimidation; the repeal of repressive legislation; crucially, the appointment of a credible financial team and the production of a credible economic plan; and a clear road map to the national elections, with guarantees that they will be conducted freely and fairly, in full view of the international community. Those are the tests that we will apply, and urge others to apply, to the new power-sharing arrangements.

Nicholas Winterton: Morgan Tsvangirai has taken a great gamble in joining in power sharing with Robert Mugabe. Do the Minister and the Government not consider that all neighbouring countries, Southern African Development Community countries including South Africa and international organisations should seek to give Mr. Tsvangirai and his party, the MDC, every support and encouragement to enable him to reduce the suffering of the Zimbabwean people?

Ivan Lewis: Let us be clear: we want the new Prime Minister to succeed. We believe that we should support his courageous and brave action over a period of time to try to free Zimbabwe from tyranny. We believe that we should give him every possible support in his new role, but it is crucial that we judge the behaviour of the new Government by their actions and policies before we decide on the scale of the responses of the UK and other donors.

Geoffrey Clifton-Brown: On the very day when Morgan Tsvangirai is being sworn in as Prime Minister of the new power-sharing Government, he faces a situation, as my hon. Friend the Member for Congleton (Ann Winterton) said, in which half the remaining population of Zimbabwe are facing malnutrition, there are at least 60,000 cases of cholera and there is a desperate need for medicines. What additional steps are the British Government taking with the Southern African Development Community to have discussions with the new power-sharing Government, and how long does the Minister believe it will take to evaluate whether there is any real improvement in the situation so that the devastation and humanitarian suffering in that great country can start to be reversed?

Ivan Lewis: It is important to be clear about the help that we already provide and that is getting through: £9 million in food aid; £10 million to fight cholera; £10 million for livelihood support; £10 million for HIV prevention, as well as the support through the International Organisation for Migration for orphans and vulnerable children. In the weeks ahead, we envisage that the International Monetary Fund, the World Bank and other international institutions will begin to engage in serious discussion with the new Government about the practical help that can be made available. We believe that that help should be made available only if that Government make credible economic reform proposals, which can be delivered in the interests of the people of Zimbabwe.

Sri Lanka

Jim Cunningham: What recent discussions he has had with the Sri Lankan Government on aid to that country; and if he will make a statement.

Michael Foster: The UK does not have a bilateral aid programme with Sri Lanka. However, due to the unfolding humanitarian crisis resulting from the conflict in the north, we have committed £5 million to support agencies such as the Red Cross to deliver vital humanitarian aid. The Government regularly press the case for an end to the conflict and for allowing a full humanitarian needs assessment.

Jim Cunningham: I thank my hon. Friend for that answer. I emphasise that it has been three weeks since humanitarian aid got through to Vanni. What are we doing about a ceasefire?

Michael Foster: The severe restrictions on humanitarian agencies operating in the Vanni area means that it is difficult to get a clear picture of what is happening on the ground and how many people are affected by the conflict. That is why we have this week dispatched three departmental humanitarian experts to Sri Lanka to see for themselves the situation on the ground and to report back directly to my right hon. Friend the Secretary of State.

Michael Fabricant: The Minister has already said that the Government are applying pressure to try to relieve the position in the north of Sri Lanka. What pressure can they apply to stop the persecution of independent newspaper journalists in Colombo and journalists in the Sri Lanka Broadcasting Corporation? Sri Lanka is meant to be a democratic country. What can we do to ensure that it remains so?

Michael Foster: We impress on the Government of Sri Lanka the need to uphold humanitarian law in the country. We also agree with the EU Commission's duty to initiate an investigation into the generalised system of preferences plus—GSP plus— trade preference scheme, which depends on Sri Lanka's maintaining a good humanitarian record.

Andrew Dismore: Has my hon. Friend seen the reports that health Ministers in Colombo have issued a final warning to the eight doctors and 1,000 medical staff in Mullaiththeevu and Ki'linochchi districts to leave the Liberation Tigers of Tamil Eelam-controlled territories, and that defence Ministry officials were threatening them with
	"dire consequences for helping supporters of terrorists"?
	Will my hon. Friend do what he can to ensure that the Sri Lankan Government respect health facilities in the Tamil areas and fulfil their human rights obligations to the Tamil people?

Michael Foster: We utterly condemn threats, violence and intimidation against humanitarian workers and aid agencies, and against civilian doctors and nurses who treat people. That forms part of the content of a letter that my right hon. Friend the Secretary of State wrote to the Sri Lankan President only yesterday, reinforcing the need to look after all civilians in Sri Lanka.

Extractive Industries

Willie Rennie: What the Government's objectives are for the forthcoming extractive industries transparency initiative global conference.

Ivan Lewis: The UK has played a leading role in the development of the extractive industries transparency initiative and will work with key stakeholders at the global conference to advance it.

Willie Rennie: The initiative is a significant step forward in dealing with exploitation of oil and gas resources throughout the world. However, there is some resentment in developing countries and a feeling that the west is lecturing them about what should be done in their countries. Will the Government not only encourage such Governments to comply with the initiative, but sign up themselves and encourage Russia, India and the United States to do likewise?

Ivan Lewis: The hon. Gentleman makes a valid point. The organisation has been operating for seven years, and 24 implementing countries, 40 extractive companies and 80 institutional investors have signed up. We want as many countries as possible to sign up to the principles and the objectives that underpin the EITI's work.

Global Economic Downturn

Hugh Bayley: What steps his Department is taking to reduce the effects of the global economic downturn on poor people in developing countries.

Gareth Thomas: We are reprioritising some of our aid to help mitigate the impact of the downturn on the world's poorest. We are working with the international financial institutions, other world bodies and traditional donors, in particular in the run-up to the G20 London summit, on measures to help developing countries to maximise levels of economic growth.

Hugh Bayley: What policies to protect poor people in developing countries will the UK Government propose to other donor countries at the G20 summit and the spring meeting of the World Bank?

Gareth Thomas: We are working to ensure that the international financial institutions, in particular the World Bank, but also the regional development banks and the European Commission, continue to fund, for example, infrastructure programmes that sustain jobs, and to release more support for safety nets. We have also brought forward some additional resources to help, for example, to provide more safety nets in Ethiopia, to cover the higher costs of social protection there due to rising food prices and rising food shortages.

PRIME MINISTER

The Prime Minister was asked—

Engagements

Khalid Mahmood: If he will list his official engagements for Wednesday 11 February.

Gordon Brown: This morning I had meetings with ministerial colleagues and others, in addition to my duties in the House. I shall have further such meetings later today.

Khalid Mahmood: My constituents are fed up with irresponsibility from the bankers and the mistakes that are costing the country millions. Does my right hon. Friend accept that those allegations, including the most recent against Sir James Crosby, must be fully investigated to restore confidence in our banking sector?

Gordon Brown: It is right that we investigate serious allegations that are made about the banking system. These are serious but contested allegations; in relation to Sir James Crosby, these are allegations that he will wish to defend himself against, so it is right that he has stepped down as vice-chairman of the Financial Services Authority. It is important that the Financial Services Authority shows at this time that it is operating to the best standards possible. The Walker review that is being set up will look at exactly these matters—risk management, remuneration and the performance of boards—and I believe that the system of regulation in this country can and will be improved.

David Cameron: They can even plant questions at short notice. Let us be clear about what has happened. In the last half hour, Sir James Crosby, the man who ran HBOS and whom the Prime Minister singled out to regulate our banks and to advise our Government, has resigned over allegations that he sacked the whistleblower who knew that his bank was taking unacceptable risks. Does the Prime Minister accept that it was a serious error of judgment on his part to appoint him in the first place?

Gordon Brown: The allegations that were brought before the Select Committee on the Treasury were investigated by the independent KPMG in 2005. The allegations made by Mr. Moore were found not to be substantiated. That was an independent review, which was done by KPMG and reported to the Financial Services Authority. However, it is right that when serious allegations are made, they are properly investigated. No doubt the Treasury Committee will want to look at them; and no doubt the Conservative party will want to wait to see how that investigation takes place. The Walker committee will look at every aspect of banking regulation, which we know can be improved. The unfortunate thing is that every time we have called for more regulation, the Conservative party has called for less.

David Cameron: The Prime Minister talks about the KPMG investigation, but it was after that investigation that the bank virtually went bust. Taxpayers have poured billions of pounds into the bank. Not only was Sir James Crosby appointed as one of the top regulators in the country—and, I have to say, knighted by the Prime Minister for his services—but the Prime Minister has been relying on him for economic advice. Sir James Crosby was the man who was going to sort out the mortgage market, so will the Prime Minister confirm that, as well as standing down from the Financial Services Authority, Sir James Crosby is no longer one of his advisers? Is that the case?

Gordon Brown: Sir James Crosby did two reports: one for the Chancellor on mortgages, and one for me, when I was Chancellor, on security issues. He has completed these reports. He is no longer an economic adviser to the Government—[Hon. Members: "Ah!"] And he has only been so in the context of doing two reports. If I may say so, we are facing very big issues in the economy at the moment, and the way in which the Conservative party wants to trivialise them does it no merit.

David Cameron: There is nothing trivial about asking the Prime Minister about the man he appointed to regulate the banks. Why cannot the Prime Minister just admit, for once, that he made an error of judgment? Is this not a big part of the Prime Minister's problem? Sir James Crosby has had the decency to resign. Why cannot the Prime Minister have the decency to admit that he got something wrong? Is this not part of the problem? There has been no apology about boom and bust, and no apology about Britain being better prepared. Even the bankers have apologised—when is the Prime Minister going to? Won't you just admit, one more time, that it was a misjudgment to appoint him to all those roles?

Mr. Speaker: Order. I must tell the Leader of the Opposition that the term "you" is not permissible. He should not use it— [ Interruption. ] Order. Be quiet! I have said this time and time again, and I will not say it again.

Gordon Brown: Yesterday, he heard the four leaders of the two major banks that were brought to the point of collapse apologising for what they have done. If we had not stepped in to save the banks, I would have had to apologise for not taking the action that was necessary, but we took the right action. I just want to ask him about the judgments that he took on all the big decisions over the last year. We nationalised Northern Rock a year ago, but the Conservatives opposed the measure. On the fiscal stimulus, when every other country in the world is acting, he opposed the measures that we took. On the whole range of measures that we are taking to deal with the fiscal stimulus that is necessary, including raising the pension and raising child benefit, they are opposing what we do. I think that he has to answer to the House himself for what he has got wrong.

David Cameron: I will tell him about the judgments that we have made. Voting against VAT—that was the right judgment. Supporting a national loan guarantee scheme—that was the right judgment. The Prime Minister says that the banks' collapsing was nothing to do with him, but let us have a look at the judgments that he made when he was Chancellor. Who gave us the biggest budget deficit in the developed world? He did. Who left us the most personally indebted country in the world? He did. Who set up the regulatory system that has so failed? He did.
	Let us have a look at another of the Prime Minister's judgments. The Prime Minister and the Chancellor have told us repeatedly that the economy will start to grow again at the beginning of July this year. The Schools Secretary, the man who was the Prime Minister's chief economic adviser at the Treasury for so many years, says that we are heading for the worst recession in 100 years. Does the Prime Minister agree with his Schools Secretary?

Gordon Brown: Let us look at the judgments that he mentioned. On VAT, the Governor of the Bank of England and the Institute for Fiscal Studies have just said that it was the right decision to make. There is more money in people's pockets as a result of it. It is only the Conservative party, which has always put up VAT, that believes that the answer can never be to reduce VAT. Let us look at what we have done for business. We have introduced a loan guarantee scheme that is £1 billion. We have introduced a Bank of England facility that will start on Friday that is £50 billion, and 56,000 companies have already benefited from the schemes that we have brought in. If we had taken the advice of the Conservative party, no money would have been used. As Barack Obama said only yesterday, doing nothing is not an option.

David Cameron: Let us have a little look at who backs the Prime Minister's judgment on VAT. The Dutch say that it was
	"not a very wise thing to do".
	The Germans— [ Interruption. ] These are his friends, by the way; I am not even talking about his enemies. The Germans say that the debt will take a generation to pay off, and the French President says that the Prime Minister is "ruining" the economy— [ Interruption. ]

Mr. Speaker: Order. Hon. Members should not shout down the Leader of the Opposition. It is not allowed— [ Interruption. ] Ms Keeley, you are usually very quiet; I do not think that you should push your luck.

David Cameron: They should listen to the French President. This is what he said. He said that the Prime Minister was "ruining the economy" and that he, the President, would not be "repeating Gordon Brown's mistakes". What mistakes was he referring to?

Gordon Brown: The one pro-European that the right hon. Gentleman did not mention who supported the VAT change was the shadow shadow Chancellor, the shadow Business Secretary. I think it is remarkable—we really need to look at this—that at the point when we most need an injection of resources into the economy, the Conservative party is setting its face against ordinary families in this country who now have £20 more a month in their pockets. The people of this country will remember that the Conservatives opposed the VAT cuts; they opposed the rise in pensions; they opposed the rise in child benefit; they opposed the extra billions that we are spending on public investment; and they did so in circumstances where they knew that we have one of the lowest public debts of major countries in the world, not one of the highest.

David Cameron: The Prime Minister cannot get his facts right. The fact is that we have the biggest budget deficit of any country outside Egypt, Pakistan and Hungary—and two of them are already in the International Monetary Fund. Let us deal with a few more of the facts that the Prime Minister just gave us. My right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) voted against the VAT cut in this House. The Prime Minister never gets his facts right; he told us the other day that he was like Titian aged 90, but the fact is that Titian died at 86. For all we can see in the Government's response to this recession, they have appointed the wrong people, they have made the wrong decisions, they cannot give us a straight answer about the mess we are in, and they never apologise for anything. Now everyone can see the price that is being paid, as thousands of businesses go bust and people are made unemployed up and down our country. Is it not clear that incompetence plus arrogance equals 2 million unemployed?

Gordon Brown: What did the Leader of the Opposition say to the Conservative party conference? He said:
	"Everyone knows that business need deregulation... Who's standing in the way? The great regulator... Gordon Brown."
	He went on to say that we had to deregulate the wealth creators. At this point, when the right hon. Gentleman is calling for more regulation, perhaps he would be honest enough to admit that he has been calling for the last few years for total deregulation of many of the businesses in this country. As far as judgment is concerned, let me just say that his judgment on Northern Rock was to let it collapse; his judgment on regulation is to deregulate as much as possible; and his judgment on the fiscal stimulus is doing nothing. The decisions that he has made on the global financial crisis have been wrong, wrong and wrong every single time.

Michael Clapham: The Prime Minister will be aware that it is almost 18 months since the Law Lords made a decision denying compensation to people suffering from pleural plaques as a result of negligent exposure to asbestos. Does he agree with me that we can restore justice and fairness only if that Law Lords' decision is overturned?

Gordon Brown: I met my hon. Friend last week and we talked about this very issue. It is very important that we get a resolution following the court judgment on pleural plaques. The Secretary of State for Justice has been looking at this matter and talking to his colleagues right across Government about the implications of what can be done, and I can assure my hon. Friend that an announcement will be made very soon.

Nicholas Clegg: Since the Queen's Speech a few months ago, the Government have been churning out on average three new announcements each and every day. Will the Prime Minister tell me how many of those initiatives are being put into practice?

Gordon Brown: As I said a few minutes ago, more than 50,000 companies are benefiting from the measures that we have taken. Those measures include the new enterprise scheme; they include the working capital scheme that is being opened up in the next few days; and they include what we have done with the Inland Revenue and others to help people with the costs that they face at this time. I hope that the right hon. Gentleman will agree that we are not only helping businesses in this country, but we are helping people when they become unemployed. In only the past few weeks, we have put in an extra £500 million to help them. I hope that the right hon. Gentleman will also see the help that we are giving people with their mortgages, which is designed to keep the problem of mortgage arrears and repossessions down.

Nicholas Clegg: Let us look at some of the Prime Minister's big announcements. He said that he would get the banks lending again; they are not. He said that he would get tough on bankers' bonuses, yet he is letting them keep millions in bonuses in return for a cynical apology. He said that he would create 100,000 new jobs, yet with unemployment today standing at almost 2 million and rising, our young people of today will be tomorrow's jobless generation. It is bad enough to be a do-nothing party; is it not even worse to be a say-anything, do-nothing Prime Minister?

Gordon Brown: I have tried to explain in recent weeks that the problem with bank lending is actually the loss of foreign banking and non-banking capacity in this country. Half the lending in mortgages and half the lending to businesses came from that source. When that source leaves, as the Irish, American and other banks have left the country or have run down their capacity, the existing banks must do more.
	I can tell the right hon. Gentleman that the banks in which we have an interest are lending more than they were. The problem is that we must build out of a gap in capacity that existed because of the loss of foreign lending. I hope that the right hon. Gentleman will understand that that is what is happening at the moment. We are trying to sign lending agreements with the banks.
	As for the right hon. Gentleman's other allegations, if I had taken his advice we would have made the wrong decisions.

Rosemary McKenna: It is right that there is outrage over the fact that the highly paid bankers who helped to create the current crisis are considering being paid huge bonuses, but does my right hon. Friend agree that the bank workers at the lowest end of the scale should not be penalised for their bosses' failures?

Gordon Brown: Let me tell the House what we have done since October. I think that this must be made absolutely clear. First of all, on the boards of banks in which we have an interest no cash dividends are being paid, no cash bonuses are being paid and no share options are being paid. We have laid that down as a condition to each of the banks in which we have taken an interest. Meanwhile—I think that the House will want to know this—the four chairmen and chief executives of the two banks that we have taken over have all left, the board of HBOS no longer exists and seven people have left the board of the Royal Bank of Scotland in the past few days. Our determination is to make sure that the banking system is built on better fundamentals than in the past.
	As for bonuses, while I am aware that there are thousands of poorly paid bank employees in this country who rely on their bonuses, we must ensure that we protect the public interest as we look through what is being proposed by the Royal Bank of Scotland and other banks. I assure my hon. Friend that we are determined not only to make our banks clean of the problems that have existed, but to ensure that they operate on good principles and that the rewards are only for good, sustainable, long-term benefits that accrue to the company and not for short-term deals.

Henry Bellingham: Does the Prime Minister recall that when the Home Office announced 15 months ago that over 7,500 illegal immigrants were working in the security industry—including one who was guarding his car—he and his Ministers announced immediate and tough action? Can he tell the House how many of those people have been deported?

Gordon Brown: I shall write to the hon. Gentleman on that very matter, but what I will say is that once the problem was identified, we took action immediately.

Sharon Hodgson: When I visited Jobcentre Plus in Washington, I saw for myself that the recent loss of 1,200 jobs at Nissan has been a bitter blow for the north-east, especially after 10 years of consistently falling unemployment across the region. May I ask the Prime Minister to echo my appreciation for the sterling work done by the people in Jobcentre Plus, and may I press him further to see what more he and the Government can do to protect jobs and keep people working in the north-east?

Gordon Brown: It is right to say that for every person who is made unemployed there is sadness and sorrow, and we will do what we can to help people back to work as quickly as possible. It is right to say that employment has risen in my hon. Friend's region over the past 10 years, but it is also right to say that the car makers and other industries are facing very big problems. Our determination is to give people help—help enabling them to stay in jobs where that is possible, help enabling them to get new jobs, and help enabling those who are already unemployed to get work as quickly as possible. When I met the members of the National Employment Panel this morning to discuss exactly these issues, many employers said that as a result of the 500,000 vacancies in the economy, they would be able to help people to get back into work.

David Heath: In response to my right hon. Friend the Member for Sheffield, Hallam (Mr. Clegg), the Prime Minister mentioned housing, but although he announced a mortgage deferral scheme two months ago, it still has not happened. He said that he would protect the low paid, yet council house rents are increasing massively this year. He said that he would increase house building, yet only half as many houses were built last year as the year before. Is this a failure of management, or a failure of leadership?

Gordon Brown: On 1 January, we introduced the new scheme that will help people who are unemployed with their mortgages. That is now working; at 13 weeks, people will get help with their mortgages. We also negotiated with a number of building societies and banks that they will enforce a moratorium on those payments that it is necessary to make in situations where we can avoid repossessions. We are now bringing through the Banking Bill, which is in the House of Commons this week, and it contains the measures that will enable us to go further and provide a better insurance scheme for people who have problems with their mortgages. We have taken the action that is necessary, and we will continue to take whatever action is necessary. The hon. Gentleman should be supporting us, not criticising us.

Andrew Gwynne: Extensive gritting took place throughout my Greater Manchester constituency during the recent wintry weather, keeping roads open and services running. We should contrast that with the chaos in our capital city, London, where the tube was closed and bus services did not run. The Mayor blamed that on the divine; does the Prime Minister think that that embarrassment was down to an act of God or the inaction of Boris?

Gordon Brown: The combination of the policy of the Mayor of London with those of the Conservative party to cut public spending now would mean that Londoners would be in a far worse position, if ever we had the misfortune of having a Conservative Government. It should be pointed out to the people of London, and to the people of the country, that if the Conservatives were in government, they would in a few weeks' time be cutting local council funding plans, cutting police, cutting schools and cutting transport—they would be making cuts to vital services at a time when people need those services most. That is the Conservative party we know.

Paul Rowen: Will the Prime Minister tell the House what steps the Government are taking to ensure that allegations of war crimes in Gaza are investigated by the International Criminal Court? Have the Government asked the Security Council to refer these allegations to the ICC?

Gordon Brown: The position is, first, that the United Nations Secretary-General has asked for an inquiry into what happened, and particularly into what happened to the UN headquarters in Gaza, and, secondly, the Israeli Government have announced an inquiry into their actions. We must await the results of these inquiries.

Bill Olner: Does my right hon. Friend share the pride in Grenadier Guardsman Scott Blaney from my constituency of Nuneaton, who has just returned to duties after having lost a leg while on operations in Afghanistan? Does my right hon. Friend further agree that we should be doing as much as we possibly can to get all our injured Army personnel back to work once they have recovered from their injuries?

Gordon Brown: My hon. Friend is absolutely right. I have visited Birmingham, where people who have been injured in Iraq or Afghanistan have been given help to recuperate and get back either into the armed forces or into work. Seeing the progress that people who have been severely injured have made is a very moving experience. I think the whole House will be proud of the 22-year-old Guardsman Scott Blaney, who has been standing guard at the Tower of London this week despite all the injuries that he has suffered. He is a shining example of the bravery, fortitude and determination of our armed services.

Richard Taylor: Will the Prime Minister consider providing Government help to enable medium-sized businesses to increase the pay to their workers on short-time working, as that might help stem the flow of redundancies of skilled, and possibly irreplaceable, staff?

Gordon Brown: The hon. Gentleman is right that there are things that can be done in this area. First, I ask him to look at the working capital scheme for medium-sized businesses, which will give them access to working capital—loan capital—over the period of the next year or two. I also remind him of the Inland Revenue scheme that allows a deferral of taxation, but we are also looking at how our training grant system can provide help for half a day or one day a week to allow workers to be kept on in industries that would otherwise be laying people off. In each area where we can take action, we will take action, and I will be very happy to look at any proposal that the hon. Gentleman puts forward.

Dari Taylor: My right hon. Friend knows that on Teesside the renewables and biofuels industry is both vibrant and growing. The Teesside Ensus plant alone will produce a third of the UK's bioethanol demand—the equivalent of taking 300,000 cars off the road—while using soy animal feed in a significant form, which will reduce deforestation. What are the Government—

Mr. Speaker: Order. The hon. Lady must be fair to other Back Benchers. When a supplementary is too long, it is unfair to them.

Gordon Brown: Because of our ambitious carbon emissions targets—one for 2050 and one for the earlier period—we have a duty to invest, as well as the benefit from investing, in the low-carbon industries of this country. My hon. Friend is right to say that where we can gain advantage from investing in new environmental technologies that will benefit either the car or other vehicles, or businesses in general in our country, it is right to do so. We will shortly be publishing our proposals on how we can contribute to the development of a low-carbon economy for the future.

Gary Streeter: Thousands of dairy farmers wake up every morning throughout the United Kingdom wondering whether this will be the day when the herd that they have so lovingly built up over their lifetime will be slaughtered because of a positive reaction to a test for bovine TB. When will this urban-centric Government put in place effective policies to deal with that dreadful disease?

Gordon Brown: As the hon. Gentleman knows, the means of dealing with that disease have been hotly debated over the years. I am happy to look at any proposals that he has for the future, but may I say that my right hon. Friend the Secretary of State for Environment, Food and Rural Affairs has regular discussions with the National Farmers Union on those very issues, and the investment that we have made in rural areas would be cut by the Conservative party?

Tom Levitt: Will my right hon. Friend commend the Tarmac cement plant in my constituency for its announcement of 60 new apprenticeships this year? Will he also commend the 100 businesses from Nottinghamshire and Derbyshire that came together recently to hear about the Train to Gain project? Does he agree that investment in skills now—recession or no recession—is the key to prosperity in the future?

Gordon Brown: My hon. Friend may have noticed an advertisement from the CBI and other organisations saying that it is time to invest in the future—it is time to invest in the skills of the future. We are increasing apprenticeships this year, as a result of the decisions that we have made, by 35,000, so that there is not a cut in training during a period of downturn. We are also investing more in Train to Gain to enable people not only to continue in work, but to get the skills for the future. I must repeat to the House that if we had followed the advice of the Conservative party, we would be cutting these programmes when they are desperately needed now.

Angela Watkinson: Why has a former trustee of a secretive overseas bank that specialises in tax evasion been appointed to manage the taxpayers' stake in our banking industry?

Gordon Brown: He is acting chairman; he has not been appointed as full chairman.

Desmond Turner: I am sure that my right hon. Friend would agree that we must not let the financial crisis deflect us from tackling climate change. I do not know whether he is aware that companies involved in developing low-carbon technologies are suffering from the credit crunch and that projects are at risk. Will he undertake to ensure that the Government do all that they can to give these companies the support that they need in order to deliver?

Gordon Brown: My hon. Friend is absolutely right; there is a growing low-carbon environmental sector in this country that we need to support. It is worth about £100 billion and employs about 800,000 people, and we will do what we can to support it, even if the Conservative party seems to have a huge disinterest in the environment now.

Philip Davies: In 2006, as many as one in six prisoners were released before they were halfway through their sentence—in 2007, that had risen to more than one in three prisoners. Can the Prime Minister explain to the House why he thinks it is a good idea to let so many prisoners out of jail early?

Gordon Brown: The early-release scheme proposals were agreed by the House. We have said that we will look at them as we build new prison places. We are already building new prison places and, if I may say so, far from being soft on prisoners, there are now 20,000 more people in prison now than there were when we came to power.

Mr. Speaker: I call David Chaytor: he is not here. I call John Mann: he is not here. I call Gordon Prentice: you are here.

Gordon Prentice: I have been here for the last five weeks, Mr. Speaker.  [ Laughter. ]
	Does my friend believe, as I do, that we need a mandatory register of lobbyists, independently managed and enforced? Will he introduce legislation without delay?

Gordon Brown: I agree that we have to take very seriously the problem of lobbyists and what they are doing in both the House of Lords and the House of Commons. We will have to look at all the measures that could make the system work better. I am happy to look at my hon. Friend's proposal and see what we can do.

Julian Brazier: Can the Prime Minister confirm that 150,000 work permits were issued to non-EU citizens last year—roughly four times the level under previous Governments, Labour as well as Conservative? How does that fit with his vision of reducing our unemployment rate?

Gordon Brown: We have just introduced a points system that means that unskilled workers will not get into the country—under the circumstances that the hon. Gentleman is talking about—unless they have a contribution to make. We are the first Government to do that, and it is the right thing to do. The hon. Gentleman will see the impact of the points system in the future. Despite all the figures that are bandied about, the percentage of non-UK nationals employed in the UK is 8 per cent., which is lower than in many of the countries with which people compare us.

Climate Change (Sectoral Targets)

Motion for leave to introduce a Bill (Standing Order No. 23)

Martin Caton: I beg to move,
	That leave be given to bring in a Bill to set targets relating to energy generation and consumption; to make provision for the sectoral targets to be met; and for connected purposes.
	The Bill focuses on the energy efficiency of residential accommodation; the level of energy use in the commercial and public services; the quantity of electricity generated from renewable sources; the amount of combined heat and power capacity; the number of dwellings with one or more microgeneration installations; and the level of carbon emissions from existing and new homes. It would set initial targets for those sectors, and would require the Secretary of State to specify further targets, especially if so advised by the Climate Change Committee or any other body established by Act of Parliament to advise the Government on climate change.
	In addition, the Bill would require the Secretary of State to consult and seek agreement with organisations representing environmental interests, organisations representing business interests and, especially, organisations representing the energy efficiency industry, the renewables industry, the combined heat and power industry and the microgeneration industry. Within a year of deciding on his targets, the Secretary of State would have to publish, and then implement, a strategy for delivering them.
	The central aim of the Bill is to help us meet our 80 per cent. CO2 reduction target and thereby play our part in limiting the increase in the average temperature of our planet in order to avert disaster. It is also about trying to ensure that the energy needs of our country can be satisfied in the future.
	This Bill owes much to the work of my hon. Friend the Member for Morley and Rothwell (Colin Challen), who introduced a similar measure in the last Session and also sought to cover some of the same territory in a new clause that he proposed to the Climate Change Bill—now, of course, the Climate Change Act 2008. His expertise and dedication on the challenge of global warming are recognised across the House, and his new book—it is entitled "Too Little, Too Late" and it was launched last night—is now available.

John McDonnell: How much?

Martin Caton: It costs £7.
	The Bill is about providing a way of meeting our CO2 reduction targets and protecting energy security by the establishment of a series of specific targets for energy saving and sustainable energy generation.
	The 2003 energy White Paper described the energy that we do not need to use as the cheapest energy, and improving energy efficiency delivers just that. This is the low-hanging fruit on the climate change tree, but to date we have not harvested it anything like as well as we should have done—or, indeed, as well as some other countries have done.
	The Bill sets an initial sectoral target for energy efficiency in residential accommodation of a 20 per cent. improvement on 2010 standards by 2020. The target for energy use in commercial and public services is a reduction of 10 per cent. on 2005 levels by 2010, and a further 10 per cent. by 2020. The target for combined heat and power is to have 10 GW of capacity installed by 2010. The target for microgeneration is that the number of dwellings with one or more microgeneration installations shall be eight times the figure pertaining in 2007. The Bill sets 2016 as the date when all existing homes shall be low carbon and all new homes zero carbon, and it also sets other targets with regard to building regulations.
	The House may find the targets that I have just listed familiar; in fact, all of them are already stated Government objectives. What is new is that, if enacted, this legislation would make them binding, in the way that the targets set out in the Climate Change Act 2008 are binding.
	I believe that we now have to move from aspiration to delivery, and the best way to do that is through establishing clear requirements in law that can be revised as more information about the scale of the challenge becomes available and as new green technologies are developed and improved. One of the major benefits of passing this legislation would be to give the industries responsible for those technologies a firmer platform to build on and more certainty about future opportunities.
	Good firms involved in the manufacture and installation of insulation and other energy efficiency measures, as well as companies in the microgeneration industry, combined heat and power and renewables, would all benefit from the underlying certainty provided by a combination of legally binding targets and policies. That would positively impact on their plans and investment decisions, and that in itself would take us forward.
	The Stern report made the point that earlier action to limit the rise in temperature would be most effective and least expensive. Much of the climate change science since then has pointed in the direction of still greater urgency. According to any number of indicators—such as the rate of thinning of the Arctic ice, the impact of the loss of reflection of solar energy as snow and ice cover shrinks, the intensified drought conditions in places such as sub-Saharan Africa and, of course, eastern Australia, the melt-rate of the Greenland ice cap, the slowdown in the gulf stream, insect migration, extinction rates in vulnerable habitats and the degrading of carbon sinks—the evidence is growing that time is running out, and probably doing so faster than we thought even a few years ago.
	We need to act, locally as well as globally, and this Bill could help. First, it would mean that the Government had to meet their targets in the sectors identified. They would have to plan to make sure that they achieved them, and that would lead directly to significant reductions in greenhouse gas emissions. Secondly, the Bill would also send out a message about our resolve to move away from the high-carbon economy. At present, there is a bit of a credibility gap between what the Government and Parliament say about the threat of global warming—that it is the greatest challenge that we face and that, if we do not tackle it, the consequences could be cataclysmic—and what is actually being done.
	That perception problem exists in other nations and in our own population. Of course, this fairly modest Bill will not, on its own, turn that around, but it could help, because by enacting it, we would be saying, "We will not just try to improve energy efficiency, energy saving, and renewable and sustainable energy; we are committed to succeeding."
	 Question put and agreed to.
	 Ordered,
	That Mr. Martin Caton, Colin Challen, Mr. David Chaytor, Dr. Ian Gibson, Mr. David Heath, Dan Rogerson, Alan Simpson, Dr. Desmond Turner, Joan Walley, and Mr. Michael Meacher present the Bill.
	Mr. Martin Caton accordingly presented the Bill.
	 Bill read the First time; to be read a Second time on Friday 8 May and to be printed (Bill 61).

Opposition Day
	 — 
	[5th Allotted Day]

Housing Waiting Lists

Mr. Speaker: I inform the House that I have selected the amendment in the name of the Prime Minister.

Grant Shapps: I beg to move,
	That this House notes that social housing waiting lists have increased to a record 1.8 million families, over 4.5 million people, over the last 12 months; recognises that the Government's policies have reduced levels of house-building across all tenures; cautions that the number of families waiting for social housing is rising to record figures; expresses serious concern that the number of children living in temporary accommodation has doubled in the last 10 years; warns that the Government's changes to the system for counting rough sleepers will drastically under-estimate the problem; further notes that the Government's top-down policies with regard to housing have strangled it with red tape; and is concerned about the implications of the Government's housing policies for the future supply of housing in general and for families and the most vulnerable in society in particular.
	Every Member of Parliament knows that sinking feeling they can have when someone comes into their surgery desperately needing help and assistance with housing. There is the vulnerable young man with no dependants and no priority on the housing waiting list; the woman fearful of an abusive partner, who is almost scared even to discuss her situation; or the couple who, with the recession biting, are struggling to pay their private rent and, incredibly, are advised that the only way to work the system is to make themselves "unintentionally" homeless by deliberately withholding payment from a landlord whom they like and trust. There are the endless letters from general practitioners, social services and us Members of Parliament, trying to plead exceptional cases. We MPs do what we can to help; we work the system, write those letters, and try to establish whether the process might have gone wrong, or whether an individual might be better represented in their case.
	Every now and then, we have a small triumph, and get a letter from a delighted constituent saying that without our help, they would still be living in appalling, cramped conditions in unsuitable circumstances. Those letters may give us a little job satisfaction for a moment, but we always have the sneaking suspicion that although we did what we could to help in that case, there are still thousands of others suffering on the ever-growing housing waiting lists. It turns out that the figures fully justify our unease.

Bob Russell: Does the hon. Gentleman think that there may be a connection between the scenario that he paints and the right to buy, coupled, most importantly, with the failure of successive Governments over the past 25 years to undertake a council house building programme, such as that which the two main parties rightly undertook—they can be proud of having done so—in the 1940s, '50s, '60s and '70s?

Grant Shapps: The question is almost as broad as the subject of the debate. We can debate the policies that were in place when I was at school, or we can talk about the future. The most relevant period in history to discuss is probably the past 12 years, during which we have built just a tiny fraction of the amount of social housing previously built. I will come on to the figures in a short while, and I hope answer some of the other questions that the hon. Gentleman asked.
	Today there is an all-time record of 1.8 million families languishing on housing waiting lists; that is getting on for twice the figure of 12 years ago. According to the Department for Communities and Local Government, that equates to approximately 4.5 million people, each of whom has their own, sometimes desperate, story to tell. The situation is definitely dire, but it is important to understand how we got here. I do not believe that the Government are hell-bent on increasing social housing waiting lists or on making people homeless, but regrettably it is as a result of policies that they pursued that we have ended up in this situation.
	At the Labour party conference in Blackpool back in 1994, the shadow Chancellor, now Prime Minister, told his audience:
	"When people ask 'what would a Labour government do today?' Let us tell them...we will get Britain building homes again".
	Those are fine words, but how different the reality has been. Under the last Conservative Government an average of 171,000 homes were built each year across England. Under Labour, that average has fallen to 148,000—a drop of 23,000 homes a year. These are not just statistics. These are missing homes for real people. It is not just in the market housing area that the Government have a truly dismal record. Since 1997 there has been a persistent shortfall in the provision of affordable housing. In particular, there has been a failure to deliver sufficient housing for social rent.

Karen Buck: rose—

Grant Shapps: I give way to a Member who I know agrees with that point.

Karen Buck: I am grateful to the hon. Gentleman for giving way, but I am not sure that he will like the point that I am about to make. Will he join me in criticising Conservative flagship Westminster council, which in the past two years has managed to achieve a proportion of affordable homes at only 11 per cent. of all the homes being built? Is it not the case that Conservative councils across the country, and indeed the hon. Gentleman in his capacity as a Member of Parliament, are blocking the building of affordable homes?

Grant Shapps: That intervention gets to the heart of the difference between the parties on housing. I will come to that later.
	I know that the Minister has only recently taken on her portfolio, but she would do well to consider these figures. In the last recession, 60,000 affordable homes were built by my right hon. Friend the Member for North-West Hampshire (Sir George Young) when he was the Housing Minister. This year we will be lucky if 10,000 affordable houses are built. It is a question not so much of what proportion of the total are affordable as of how many homes are built in total. That is the main point that we have to understand. Eleven per cent. of a big figure means more than a larger percentage of a smaller figure.

Karen Buck: Is it a corollary of the hon. Gentleman's argument that he intends to increase direct Government subsidy in the building of homes? One of the issues, on which I have had a disagreement with those on my own side over the past 12 years, is exactly how we finance the building of new affordable and social homes. Is he saying that his party is now committed to increasing direct Government subsidy?

Grant Shapps: The hon. Lady knows a great deal about social affordable housing and she has hit on a vital point. It is obvious to anybody—we need not pretend otherwise—that we are not about to return to a situation where the section 106 building of all affordable housing will deliver. In the boom years when so many building applications were made, it did not deliver the required amount of affordable housing, so it will not deliver in the future. I will come on to the figures.
	I understood the hon. Lady's question to be about whether a change in the system is needed. Of course there must be a change in the system. I will come on to— [Interruption.] If hon. Members will let me make some headway, I will come to what I think needs to change. It is clear that what has happened up to now has been a complete and utter failure.
	The figures speak for themselves. This is the part that I know Labour Members understand. Less new social rent housing has been built in every year under the Labour Government than in any year under the Thatcher and Major Administrations—less social housing every year.

Christopher Huhne: I entirely agree that we are building too few houses for social rent. We have an enormous opportunity in the current circumstances, when many of the big five house builders are mothballing flats. In my constituency, for example, there is a development of 72 flats that have been half-built and are being sealed against the weather. They could be finished tomorrow if the finance was available. Does the hon. Gentleman agree that finance should be made available to bring that housing into social rent? If so, will he press on his hon. Friend the shadow Chancellor the need for a fiscal stimulus to do that?

Grant Shapps: The hon. Gentleman picks up on an important point. One of the extraordinary things about the Government's programme—I am sure they will talk about this in the debate—is that they allotted £8.4 billion for affordable housing in the comprehensive spending review from April 2008 to 2011. If we ask how much of that has been spent, we discover that it is very little, because the issue is driven by market housing, and the market housing is not happening for the reasons that the hon. Gentleman just outlined—mothballing. Aligned with that issue is the number of empty homes—those that have been built but not sold and those that have been previously sold but are now empty. We hear today from the Empty Homes Agency that that number has hit what is probably an all-time record, with 1 million homes left empty. That is a scandal, too, and the Government could do far more to address it.

Lynne Jones: I agree with the hon. Gentleman's criticism of the Government and their failure to invest in building new council and social housing. One of the problems in my constituency is not so much the lack of new housing, although that is a problem, but the fact that so many existing council homes have had to be demolished because of a lack of investment in existing homes. That began with a 70 per cent. overall reduction in our capital expenditure during the Conservative years. He has to look at overall housing investment, not just at new builds. The problem with the current Government is that they continued for far too long—

Mr. Speaker: Order. An intervention should not be a speech.

Grant Shapps: I understand the intervention and the sense of frustration on the part of some Government Back Benchers. It is a fact that the number of social houses built for rent has halved over the past 12 years. Simply going back to a time when another party was in power—now 12 years ago—and claiming that all the problems can be traced back to somebody else is an argument that has long gone. We need to consider the situation over the past few years and to understand that if one builds only half the number of social houses available for rent, one de facto ends up with a big social housing waiting list. That is how we have ended up with 1.8 million people languishing on that list.

Sarah Teather: Let me take the hon. Gentleman on to his current policy. He mentions empty homes. Does he support empty dwelling management orders, for example? Does he support Liberal Democrat calls for a cut in VAT on renovation and rebuild?

Grant Shapps: I shall leave it to Liberal Democrat Front Benchers to explain their policies and shall instead make some progress.

Clive Betts: I know that the hon. Gentleman does not want to go back to the situation before 1997, but does he not recognise that the fundamental problem that the Government have had since 1997 is dealing with the incredible backlog of disrepair in social rented stock that they inherited from the previous Government? There were 40-year-old bathrooms and kitchens, and windows that had condensation and leaked. Since 1997, the priority has been to repair them. The legacy of the previous Government under his party caused the concentration on that priority.

Grant Shapps: I am tempted to say that the current Administration always like to think that it is someone else's fault. If it is not the fault of somebody else abroad, it is the fault of the Government who were in power all those years ago. It is true that houses need repair, but I should have thought that that was obvious when the Prime Minister made the 1994 Blackpool conference speech in which he stated that the money from housing sales would be put to use to build more homes. That policy option was available at the time, but what has happened since is that the money that was ring-fenced from right-to-buy sales has not been used to provide new council housing.
	In fact, when we left office, 1,550 council houses were still being built each year, whereas last year the figure had fallen to 450—and that, by the way, was an all-time record. There has been a tremendous drop in the number of council houses being built, and there are choices that the Government could have made over any of the last 12 years to help provide more social affordable housing. They failed to make those decisions, which is why they now preside over a housing waiting list that has nearly doubled during their time in office.

Nick Raynsford: The hon. Gentleman seems extraordinarily reluctant to recognise that the key issue is the number of homes that are in decent condition and available to let. The problem of the legacy inherited from the Conservative Government was that there was a £19 billion backlog of disrepair affecting millions of council houses. Will he now give credit to the Government for the action that has been taken to improve large numbers of those homes?

Grant Shapps: My No. 1 priority is the 1.8 million families—4.5 million people—who are now languishing on the Labour party's waiting list trying to get a decent home. It is an absolute scandal. The last Conservative Government created 52,000 affordable homes a year, but the Labour Government have managed just 27,000 a year. The Government's recession cannot be used as an excuse, either. As I said before, during 1992—a year of recession—the then Housing Minister, my right hon. Friend the Member for North-West Hampshire, ensured that 60,000 affordable homes were built. Estimates suggest that that can be compared with 10,000 this year.

Simon Hughes: I join the hon. Gentleman in paying tribute to the right hon. Member for North-West Hampshire (Sir George Young); I remember his time as Housing Minister with pleasure. However, we want to know to what the Conservative party would commit in terms of the number of new social housing units, the number of council properties and the amount of budgetary spend from a Conservative Government in year one. What is the answer?

Grant Shapps: I appreciate the hon. Gentleman's interest in our manifesto, but I am afraid that he will have to wait for our Green Paper on housing to fill in the details and to find out what the next Conservative Government will do.
	I am left with the impression that although this Labour Government never admit to doing anything wrong, they recognise at least privately that they have failed on housing policy. That is presumably why on taking power the Prime Minister came out with his bold statement about having 3 million new homes by 2020—a headline-grabbing initiative. To punctuate his commitment to housing, he invited the Minister for Housing to attend Cabinet, declaring that housing was from now on his No. 1 priority.
	Considering the high priority status of housing, it is remarkable that in 2008 alone I have faced three different Housing Ministers across this Dispatch Box. That is the level of the priority. Of course, it is not the fault of the Minister for Housing that she inherited the 3 million by 2020 target, which we now see was based on wishful thinking. I think that she was immediately wise enough to recognise the difference between what she called a target and a mere ambition.
	The debate is not about party politics or political point scoring; it is about real people's lives. Reports from the Conservative Homelessness Foundation reveal the real pressures that exist at the very bottom of the housing ladder—among people who are living on the pavements. All the years of failing to build have led to a severe lack of social housing, and even more to a dramatic loss of mobility in the existing social housing stock. As a result, those in temporary accommodation can expect to find themselves there much longer simply because so little move-on housing is available.
	I am deeply alarmed by the Government's failure to do anything about the Department for Communities and Local Government's approach to bracketing down the rough sleeper estimates provided by local authorities. Rather than the accurate number of 1,000-plus people sleeping rough on the nation's streets each night, the official figure is therefore just 483. Worse is still to come. The Government's new rough sleeping strategy, "No One Left Out", which was published in November 2008 by the Under-Secretary of State for Communities and Local Government, the hon. Member for Hartlepool (Mr. Wright), states:
	"We will no longer ask local authorities that do not count to provide an annual estimate in their annual housing statistics return."
	It is important to understand what that means. At a stroke, simply by fiddling the figures, the Government will report the laughable figure of 214 people sleeping on the nation's streets, compared with the more likely estimate of more than 1,000.

Lembit �pik: Is the hon. Gentleman aware of the work that Crisis, the homelessness charity, has done, which quite clearly shows that many more people are sleeping rough? The hidden homelesspeople who are living in other people's homes, in frankly second-world conditionscontribute to the problem. Does he agree with me and with David Coulthread from Crisis that we have to be more honest about the figures before we can have a more honest strategy to resolve the issues?

Grant Shapps: The hon. Gentleman is absolutely right. I have some sympathy with the Government on this issue, and I have tried to work constructively with them. It is notoriously difficult to work out how many people are living rough because it is so difficult to count them. It is even harder to find out how many people are homeless, with definitions including living in hostels and bed-and-breakfast accommodation, and sofa surfing in other people's houses. I completely understand that it is not an easy science, but it is incredibly disingenuous to fail to count correctly the number of people sleeping on the streets.
	I have pointed out the problem to Ministers before, and it could be resolvedat least to a reasonable extent. The latest proposals are artificially to halve the numbers to 214, but anybody walking on the streets knows that more than 214 people in the nation are sleeping on the streets. It is just not good enough, and I hope that the Minister will be able to respond to that severe problem.
	If solving social mobility would ease some of the problems and 70 per cent. of social tenants want to own their own homes, one might think that the Government would have acted somehow. They haveunder myriad complex, confusing and sometimes completely contradictory schemes, all branded under the homebuy label. The Government have a target of helping 120,000 households into home ownership between 2005 and 2010. How have they done? There have been 4,500 sales under their open market homebuy scheme and 18,500 under their new build homebuy programme; so far they have got to about 23,000 of their 120,000 target, which is not too good. Social homebuy, a scheme designed to have helped by now in excess of 10,000 households, has in fact assisted just 235 families.
	A couple of weeks ago, I asked the Minister for Housing about the issue; she told me that social homebuy, which has helped just 235 families, was just a pilot. I know that she is just the latest incumbent to hold the fast-churn housing brief, but I have to tell her that she is wrong. The scheme may have been a pilot once, but it has not been for nearly a year, and by now we would have expected it to be having an impact. According to the Government's own figures, about 5,000 homes should have been purchased in that time. In fact, since the scheme ceased to be a pilot, it has been dropped pretty quickly by housing associations and local authorities.
	There is a better way. We will scrap Labour's failed top-down targets and replace them with real incentives to create the kinds of communities where people really want to live. We will scrap regional planning, regional assemblies, regional spatial strategies and all the quangos directed to tell local people that the Government know what is best for them. We will replace it all with a system that works with, rather than against, local people, helping them to develop their own neighbourhoods.

Karen Buck: Has the hon. Gentleman communicated that desire to abolish targets to Boris Johnson, who, as we know, is the most senior executive Conservative in the country? He has an affordable housing target and, interestingly, has also completely failed to carry the boroughs with him. Of the 32 boroughs that have been asked to respond to the Greater London authority's housing target, 22 have simply failed to negotiate anything at all.

Grant Shapps: That is a matter for local authorities, local government and devolved government, where that exists. Local authorities decide on how to proceed with such matters. That is the whole point of handing power to people locally. The Mayor will decide what is best for his local area; that absolutely makes sense and is consistent with everything that I am saying about Whitehall and how it should not make such decisions.

Nick Raynsford: Given the hon. Gentleman's earlier emphasis on the need to increase the output of social and affordable housing, what would he do if he were in office and discovered that devolving those options to local authorities, the Mayor of London and others did not produce the results that he expected?

Grant Shapps: I would quite simply increase the incentives. The difference between our approach and Labour's is that rather than thinking that the way to solve a housing crisis is to create ever-larger, top-down, Whitehall-driven, almost Soviet tractor-style targets for building homes in people's communities, we can work with communities to create the housing that is needed.
	People are perfectly rational: all we need to do is provide incentives and allow people to get something out of them. We should allow people to improve the development of their communities and get something in return for creating more housing. When my right hon. Friend the Member for North-West Hampshire was Minister for Housing, that system built more homes; when we combine it with those additional incentives for local communities, even more homes will be delivered.

Clive Betts: I am fascinated by that answer. Clearly there is a well worked out policy lurking there somewhere. Will the hon. Gentleman precisely define what the incentives would be and how much they would cost?

Grant Shapps: If the hon. Gentleman wants to descend into our policy papers, he is welcome to do so. As I said in my conference speech back in October, for example, an element of council tax should be kept locally when new homes are built. That would be an incentive for local authorities to build more homes and help to ensure that local people got something out of it.

Clive Betts: rose

Grant Shapps: I am happy to go into an extended debate on this

Clive Betts: indicated assent.

Grant Shapps: Fine; with interventions, I am sure that we can. However, I am keen that others should be able to contribute.
	There are systems of incentives that we can put in place, such as the one linked to council tax. Furthermore, the Government now say that 15,000 homes have to be built in my constituency, but extraordinarily they think that that can be done by closing down our local hospital and cutting accident and emergency, maternity, elderly care and paediatric services and all surgery and operations. They then think that the local population will go for their housing targets. That does not work; we have to work with communities, join up the services and give people something in return.
	The Government's record on housing is one of complete failure: top-down targets working against local communities, rocketing house prices followed by a crash, and the slamming in people's faces of the door to home ownership. Housing is central to today's financial crisis, and the collapse of our housing market is both a cause and consequence of the severity of Labour's recession, but the people who will hurt the most are the people on the all-time-record social housing waiting lists, whom this tired old Government seem incapable of helpingor are too incompetent to help.

Margaret Beckett: I beg to move an amendment, to leave out from House to the end of the Question and add:
	notes that the Government is investing over 8 billion between 2008 and 2011 to increase the supply of social and affordable housing, has invested over 29 billion since 1997 to bring social housing up to a decent standard and has made 205 million available for a mortgage rescue scheme to support the most vulnerable home owners facing repossession so they can remain in their home; further notes that there has been a 74 per cent. reduction in rough sleeping since 1998, that the long term use of bed and breakfast accommodation as temporary accommodation for families provided under the homelessness legislation has ended and that since 2003 the number of people who have been accepted as owed a main duty under the homelessness legislation has reduced by 60 per cent.; further notes that the Government has helped more than 110,000 households into low cost home ownership since 2001; believes that the introduction of enhanced housing options services provides tailored housing advice reflecting a household's individual circumstances while choice-based lettings schemes give social housing applicants greater choice over where they want to live; and further believes that the Government has taken measures to make best use of the social housing stock such as tackling overcrowding and under-occupation.
	One thingperhaps the only thingthat no one in this debate is likely to dispute is that there is substantial unmet housing need in the country today. That need is visible in every sector, whether it be social housing, private sector rental or home ownership. The motion before the House first highlights the levels of house building, particularly for those in need of social housing.
	As he does on every occasion, the hon. Member for Welwyn Hatfield (Grant Shapps) made a feature of the level of new build. His fundamental argumenton house building, social housing, temporary accommodation and rough sleepingseems to be that the former Conservative Government had a housing record of which today's Conservative party should be proud, and that it contrasts favourably with the record of this Government. I am not sure that that was altogether wise of him; there are one or two flaws in that argument.
	What is unquestionably truethe hon. Member for Colchester (Bob Russell) referred to it earlieris that in the early 1980s, the then Government instigated a whole-scale sale of council properties. Understandably, that was a very popular policy. The first hole in the argument of the hon. Member for Welwyn Hatfield appears when we recall that the properties sold were not replaced. In fact, repeated obstacles were put in the way of local authoritiesmany of them Conservativethat wished to replace lost stock so that they could continue to provide homes needed for social rent. From 1983 on, however much they built, there was a net reduction in local authority housing stock in every year of the life of that Conservative Government.

Karen Buck: rose

Margaret Beckett: I was not planning to give way so early, but, okay, I will give way to my hon. Friend.

Karen Buck: I am extremely grateful to my right hon. Friend for giving way. I want to emphasise the importance of her point. Are not Conservative councils such as the one in my areaand other ones, I am surerenting back properties sold under the right to buy to house homeless households at a cost of about 400 a week to the taxpayer, when rent on the identical council flat next door costs 90 a week? Does that not expose the sheer insanity of a policy that sold but did not replace?

Margaret Beckett: My hon. Friend makes her point clearly and powerfully, and I am glad that I gave way and allowed her to make it.
	I shall anticipate anyone who wishes to point it out by saying that, since 1997, it has clearly been open to this Government to put additional resources not just into housing, but into council housing. We have done so. In partnership with housing associations, which were able to raise money from the private sector, we instituted a house building programme that built 25,300 homes for social rent last year; that was part of overall additions to the social rented stock of more than 29,300.

Sarah Teather: I am pleased to hear the Minister point out that the Conservatives began the policy of not allowing full receipts to be returned to councils after the right to buy. However, her own Government did not change that policy, and receipts from right to buy continue to go to the Treasury instead of being invested locally into new build.

Margaret Beckett: I will return to that point a little later in my speech; if the hon. Lady wishes, I will give way to her again then.
	That brings me to the second flaw in the hon. Gentleman's argument: that it is somehow all our fault that we do not have enough social or low-cost housing. It is the case that not all the substantial resourcesand they were substantialmade available for investment in housing went into new build. Why not? It is only right to remind the House that when we came to power in 1997, we found it necessaryI use the phrase beloved of the Leader of the Opposition and the shadow Chancellorto mend the roof while the sun was shining. In fact, we found ourselves mending roofs not just in housing but in schools, hospitals, and laboratories; roofs that had literalnot virtual or metaphorical, but literalholes in them; roofs in every part of the public sector and in every part of the country. What is more, when it came to social housing, we were not just mending roofs but replacing doors, windows, floors, kitchens and bathrooms. We were picking up the tabbillions of pounds-worth of tabfor 18 years of neglect, decay and dereliction, so that council tenants might have not just a roof over their heads but a decent home. It has long been a source of complete astonishment to me that anybody on the Conservative Front Bench has the unmitigated gall to accuse us of not mending the roof when the sun was shining. The Government we replaced left a 19 billion backlog of desperately needed maintenance and repair right across the social housing sector.
	Moreover, this utter betrayal of stewardshipthis gross dereliction of duty of which the hon. Gentleman seems to be so proudwas committed by a Tory Government who had had the greatest windfall of any in the history of this country. I refer, of course, to the windfall bounty of North sea oil and gas, which in the years up to 1997 produced the equivalent of at least 35 million per day, every single day of the week, for a solid 17 years. I will repeat that, because I know that there is nothing that the Conservatives hate to hear more: the equivalent, in official figures, of 35 million a year, every day of the week, for 17 solid years. No Government in this country's history have ever had a greater opportunity to invest in its futurewhether it be in housing, in education or in infrastructureand none have more disgracefully neglected their responsibilities. The Norwegians, who found themselves in a not dissimilar position, still benefit from a sovereign wealth fund. What we inherited were holes in the roads, holes in the roofs, and decay and dereliction in the very fabric of our country.
	When we embarked on this huge programme of repair, we encountered yet another consequence of Conservative neglectthe effects of their recessions on the construction industry. Not only was there a dramatic drop in numbersthere was also a catastrophic deterioration in skills, with the departure of trained and skilled staff whom we could ill afford to lose. To this day, we can hear people in construction refer to the lost generation of building workers, who left the industry then and never returned. In the first quarter of 1990, there were 2.31 million people working in construction. By the last quarter of 1993, that had declined to 1.79 million, and it remained at similar levels throughout the 1990s. It was not until 2006

Grant Shapps: What about now?

Margaret Beckett: It is no good the hon. Gentleman wittering on about that. He is the one who said that he wanted to dwell on the record of the previous Conservative Government, and I am going to talk about it.
	It was not until 2006 that the number climbed back to over 2 million; and it may be no coincidence that that was when the numbers of new homes built began to return to the levels we need.
	All this is, in part, why we have brought forward 550 million of investment from our forward programme to be spent over the next two years: not only to make sure that much needed affordable housing actually gets built but to support the construction industry while demand from the private sector is weak. Through real help now, we can keep people in work and businesses afloat, maintaining capacity in the industry so that it is ready and able to accelerate building again when the upturn comes.

Anne Main: Before the Minister gets overly confident with her remarks about skills and keeping the construction industry afloat, I draw her attention to the DCLG's conclusion, which says:
	There is a significant risk that major Government targets for development and regeneration will be missed because our planning system is unable
	to deliver. Indeed, the Government have had that pointed out to them for several years. There is a skills shortage in the planning system and they are repeatedly refusing to address that problem.

Margaret Beckett: We are taking steps to reform the planning system; we published a review only a few weeks ago. One of the major changes that has been made is the recent passage of the Planning Act 2008. I do not wish to mislead the House, but I think that I am right in saying that the Conservative party did not support large parts of the improvements that we made, including the creation of the Infrastructure Planning Commission. I entirely accept that there are defects in the planning system, but we are beginning to address them. I certainly accept that there is a skills shortage; we are addressing that and encouraging local authorities to do so.

Simon Hughes: The Minister knows that I welcome her commitment to improving greatly the Labour party's record in delivering affordable homes, and she is right to say that the construction industry has suffered terribly. Has she been able to make any progress in her discussions with the housing association sector to see whether it can spend the money that it wants to spend to do the work that it wants to do to bring people into jobs to build or finish the homes for which planning is agreed but which are not yet completed?

Margaret Beckett: Through the Homes and Communities Agency, we are talking to housing associations, among otherspeople right across the boardabout places where there are, as the hon. Gentleman says, projects in various stages of progress and what can be done to remove any obstacles to bring them to fruition. We recognise that if we are able to free up those sites, that in itself would be a contribution to keeping the industry at a higher level of operation than it otherwise would be and to bringing those homes into being.

Jacqui Lait: The right hon. Lady implied that the Planning Act 2008, which introduces the community infrastructure levy, would help to increase the number of houses being built. Is she saying that housing is now becoming subject to infrastructure statements and will therefore be the responsibility of the Infrastructure Planning Commission, because otherwise there is no reference in the Act to speeding up housing planning?

Margaret Beckett: No, I was not making that point, nor will the hon. Lady find, when she looks at the record, anything in my remarks that suggested that I was. I was merely drawing attention to the fact, a general point having been made about planning, that when it comes to improving our planning system the Conservative party has not always been supportive. I am not making any suggestion of the kind to which she refers.
	The decent homes programmea programme of repair and maintenanceis now coming close to completion. As progress has been made on making existing social rented properties fit to live in, so too the new build programme has increased and accelerated. We exceeded the spending review target of 75,000 new homes for social rent between 2005-06 and 2007-08; and in the present spending review period, the capital programme for new affordable housing increased by 50 per cent. to a record 8 billion-plus, 6.5 billion of which is for social housing.

Martin Horwood: I am certain that the Minister would want to join me in congratulating Cheltenham Borough Homes in my constituency on its early completion of the decent homes programme, which has been genuinely appreciated by many of my least well-off constituents. Does she agree, however, that it is regrettable that energy efficiency and renewable energy did not play a bigger part in that programme, and that that now offers an opportunity for more Government investment that might help to counter the recession in house building and related trades?

Margaret Beckett: I certainly take the hon. Gentleman's point. If he casts his mind back, he will recognise that when the decent homes programme was first instituted, there was not the emphasis on energy efficiency that there is today. He will also find, if he looks at the recent homes survey, that there is a higher level of energy efficiency in social housing than in most other sectors of housing, but there is certainly more to do, and more will need to be done in this sector and right across the board. I do not want to enter an area of great controversy, but it is a source of astonishment to me that those who are concerned, quite rightly, about the impact of emissions and climate change say a great deal about the potential of another runway in various parts of the south-east, but currently about 30 per cent. of our carbon dioxide emissions come from domestic buildings. We hear very little about that.

Lynne Jones: I agree with my right hon. Friend that there has been substantial investment in the decent homes programme, but, great as that has been, it has still been inadequate, particularly for cities such as Birmingham, where the only prospect that the council has of meeting the decent homes standard is to embark on large-scale demolitions. We have lost about 1,300 houses a year for several years, and we have built only 850 new homes through section 106 expenditure and social housing grant. The council reckons that we need to build at least 4,000 new social homes a year. What prospect is there that we will reach that target soon?

Margaret Beckett: I take my hon. Friend's point entirely, but I will come to the issue of new build in this sector in a moment or two, if I may.
	Our aim was to deliver 70,000 affordable homes, of which 45,000 would be for social rent in each year from 2010-11. However, I recognise the possible impact of the present downturn on those plans. We have already taken steps to address that and to keep the overall programme on track. Not only have we brought forward investment, as I have described, but we have been exploring new ways of securing new homes for social rent and affordable housing. For example, we have earmarked 200 million to spend on good quality, unsold homes from private developers. To date, about 160 million of that pot has been allocated, buying up almost 5,000 homes, including 3,400 for social rent.
	More recently, we have supported local authorities who are interested in building new housing by utilising land that would not be developed by housing associations. We are currently consulting on a series of measures that would make it easier for local authorities to build new homes. Those include changing the revenue and capital rules that currently redistribute rent and capital receipts from new council housing. We are proposing that councils will be able to keep the full revenue and capital returns from new homes, which is itself a stronger incentive to build. Councils will also be able to bid for social housing grant from the Homes and Communities Agency for funds to subsidise building, and if there are other obstacles that prevent cost-effective schemes from getting off the ground, we will look at how to overcome them.

Bob Russell: Will the right hon. Lady discuss with other Departments the fact that the Government have control over empty houses, particularly the Ministry of Defence? In my constituency, more than 200 family houses are standing emptyadmittedly privatised by the previous Tory Government and sold to Annington Homesand 3,500 is paid per dwelling, per year, out of the public purse for them to stand empty. Surely the Government should be banging heads together and ensuring that those houses can provide accommodation for people living in bed and breakfasts and inadequate housing.

Margaret Beckett: I am sure that the hon. Gentleman has raised that issue many times, but if he writes to me about it, I will be happy to look into it again. I wonder whether it is something to do with where those properties are, but I take his point about the impact.

Sarah Teather: The Minister has come to the point that I raised earlier. Why is she consulting only on giving receipts for rental income and the right to buy for new homes, and not tackling the rental income for existing stock? It would make a huge difference to councils' ability to plan what they can borrow if they knew what money was coming in to pay back that loan.

Margaret Beckett: As I hope the hon. Lady is aware, we are taking a fundamental look at how the housing revenue account operates. I expect to receive a report on that subject a little later this year. In the meantime, we were anxious to remove the active disincentives to new build.

John Hemming: Birmingham is relatively unusual in that it has retained council housing and 22 council houses were built last year. However, the council would like to build a lot more. What the Minister is saying implies that council housing is a second-best option to registered social landlords. Perhaps it should be seen as a positive option, particularly in the light of the credit crunch.

Margaret Beckett: I do not recall saying anything that would lead anyone to that conclusion, but if anyone did draw such a conclusion, let me immediately refute it. When I referred to the investment made through housing associations, I was pointing out that public money made available through a joint project with those associations, matched by money from the private sector, goes a lot further. That was undoubtedly the reason for the emphasis on extra build in the first place. I certainly do not dispute that. It is why we have created an opportunity for local authorities to bid for social housing grant.

George Young: This is a key point, which the Prime Minister touched on in his recent speech. Until such time as the rules are changed and local authority borrowing does not score against public expenditure totals, local authorities will never be cost-effective when compared with housing associations. Are there any plans to change those rules?

Margaret Beckett: As I am sure the right hon. Gentleman will recall from his own years in power, that matter is under continual discussion. However, the position on housing associations is also changing, and I do not think that anyone can be confident about the balance that will emerge in the longer term. It has unquestionably been more cost-effective for some time in the past, and it has been the model for building in partnership with housing associations that have mostly raised revenues from the sale of their own properties, but have also been able to attract investment and bank lending. It is not quite clear the extent to which that will be the case in the future, which changes the balance on these matters.

Clive Betts: Does my right hon. Friend accept that local authorities must not only build homes but develop a housing strategy that encompasses all initiatives so that they can make the best of them for their constituents? Would she be as surprised as I was to learn that Liberal-controlled Sheffield city council has bid for only 60,000to buy two empty flatsout of the 200 million that the Government have made available, compared with the 2 million that Labour-controlled Barnsley council has obtained?

Margaret Beckett: Yes, I am extremely surprised to learn that, and I am sure that my hon. Friend and other Sheffield politicians will do everything that they can to encourage a more robust approach.
	I would like to touch briefly on some of the other issues raised by the Opposition motion. While we were repairing existing homes, and building more, strides were also taken to try to tackle the number of formerly homeless people living in temporary accommodation, and to reduce the number of rough sleepers. The numbers living in temporary accommodation were themselves, in part, a reflection of the inherited neglect of housing from those Conservative years. It is no use the hon. Gentleman pretending that levels of homelessness and rough sleeping were not a well-known social scandal during his party's years in office.
	In fact, despite the hon. Gentleman's denunciation of all targets as Soviet-style, it was this Government, not his, who made an attempt to set a target to halve by 2010 the numbers of households in temporary accommodation, in comparison with 2004. I realise that that had other effects, which are causing unforeseen difficulties in other areas, but I hope that no one will contest that we did need, and do need, to tackle the issue. This Government have already overseen dramatic falls of 74 per cent. in the number of rough sleepers and we have committed ourselves to ending rough sleeping by 2012. I note that the Opposition motion fails entirely to give any recognition to what has been achieved, but merely expresses the pious hope that there will be problems with the system of counting the number of rough sleepers in future.

Grant Shapps: Will the Minister give way?

Margaret Beckett: I will, but very briefly, because I must finish.

Grant Shapps: I am grateful to the Minister for being so generous in giving way. She has not commented on the problem of the rough sleeping figures changing simply because of the failure to collect the data, which I mentioned in my speech. Will she comment on that?

Margaret Beckett: As the hon. Gentleman knows, the Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Hartlepool (Mr. Wright), deals with the issue of rough sleepers and has a good deal of specialist knowledge about it, and he will mention it in his winding-up speech. I know that he will cover the matters that the hon. Gentleman raised.
	The Opposition's motion ends by expressing concern about the implications of the Government's housing policies for the future supply of housing, especially to the most vulnerable people. However, there are two notable omissions from its text. Extraordinarily, it fails even to mention the implications of the recent downturn, which are obviously grave, and it gives no indication of Conservative policy, which I therefore assume remains to do nothing to tackle the problem. That would certainly be consistent with the approach of the previous Conservative Government. I understand that they made resources available only by buying up stock, including some houses that had already been repossessed, to prevent it from dragging the market down.
	In contrast, we are doing everything we can to help households avoid the trauma and upheaval of repossession. We have secured an agreement from lenders that repossession should always be a last resort, and they have agreed to wait a minimum of three months before seeking to repossess. We have also expanded and introduced schemes to help households in particular circumstances and to support advice services, including by providing additional court desks.

Martin Horwood: Will the Minister give way?

Margaret Beckett: If the hon. Gentleman will forgive me, I will not. I have almost concluded, and I gave way to him earlier.
	We have advanced and expanded assistance for those who have lost employment, and we have introduced a mortgage rescue scheme intended to help vulnerable groups who would be eligible for support from their local council under homelessness legislation if their homes were repossessed, meaning that they would automatically be eligible for social housing. That could include the elderly, disabled people and those with children. The scheme will help eligible families to stay in their homes as part-owners or tenants, with the support of a housing association.

Paul Burstow: rose

Margaret Beckett: I have not given way to the hon. Gentleman, so I shall take a final intervention.

Paul Burstow: I am grateful to the Minister, who has been very generous in giving way in this important debate. May I ask her, on behalf of many of my constituents who are council tenants, to say a little more about the comprehensive review of the housing revenue account, and particularly about negative subsidy? [Hon. Members: Hear, hear.] This year, council tenants in my constituency anticipate having to pay more than 10 million to the Government in their rent. They also know that the Treasury will be a net beneficiary to the tune of 200 million from the balance of subsidy receipts and payments in the coming year. They want to know, at the very least, whether during the review that the Government are still conducting, they will accept that there should be no further changes to the amount of subsidy that councils are given or to the negative subsidy that tenants are asked to pay. Will the Government consider that? At the moment, my tenants are feeling rather hard-pressed

Mr. Deputy Speaker: Order. That intervention is verging on a speech.

Margaret Beckett: I will have to study the record, and I am not quite sure about the hon. Gentleman's final point. I can certainly assure him that we are fundamentally examining all aspects of the housing revenue account. I cannot yet say what the balance of the decision will be.
	The hon. Gentleman's party has made less noise than some others about the Exchequer's surplus in the account, and I heard a lot of Hear, hear from the Opposition Benches when he mentioned it. Much has been said about that, as if it were a completely new phenomenon. The records go back only as far as 1994, but they show that the housing revenue account was in surplus under the Conservative Government and did not go into deficit until we instituted the decent homes repair programme, which I have mentioned. Such a surplus is not a new phenomenon at all. I accept that colleagues will have differing views about whether it is desirable for the housing revenue account to be in surplus, but there is nothing new about it. I am sure that Opposition Members will draw that to the attention of all the tenants' groups to which their local authorities are making representations on the matter.
	I can assure hon. Members that we are continuing work with lenders on a further scheme to help those who face potential repossession or suffer a sudden drop in household income, who were mentioned earlier, and we hope to bring it forward in the not-too-distant future.
	I note that despite the concerns raised in the motion, it makes no mention of what is presumably supposed to be the Conservatives' better offer if, as they hope, they win the next election. I know that the hon. Member for Welwyn Hatfield mentioned that in his final remarks, although I am not entirely sure whether he left the House much clearer about it. Perhaps the motion does not mention it because the Leader of the Opposition's budget proposals indicate that the budget for my Department would not be allowed to grow by more than 1 per cent. a year. In other words, if the hon. Gentleman were to become Housing Minister, he could expect to preside over a budget cut of, at best, about 800 million, or a potential cut of 10,000 new homes for social rent.
	I welcome the concern for the most vulnerable people expressed in the motion, but a debate on housing should definitely be the occasion for more than a few home truths. The plain truth is that neither the Conservatives' record in office nor their proposals for the future, insofar as they are clear, match up in any way to their rhetoric on what I agree is a vital issue for our country. That is yet another example of why it would not be safe in their hands.

Sarah Teather: When I saw today's motion, I could not quite believe my eyes. The Conservatives knocking the Government for failing to tackle the social housing waiting list is a little like Jonathan Ross complaining about the lack of moral fibre in the BBC, or perhaps Jeremy Clarkson fronting a new campaign for Scottish pride. It is simply not credible. I wonder what we will see next from the Conservatives. Perhaps the next Opposition day will bring a motion condemning the sinking of the Belgrano, talking up the benefits of free milk for every child or expressing posthumous solidarity with the 1984 miners' strike.
	I have to admire the brazen, bare-faced cheek of the hon. Member for Welwyn Hatfield (Grant Shapps). However, he delivered his speech without any obvious sense of irony, which demonstrates either a breathtaking absence of self-awareness or a degree of self-delusion that puts to shame even the best of narcissism in this great place.

Paul Truswell: I think that it was Disraeli who described the Conservative party as an organised hypocrisy. Was not today's speech by the Conservative spokesman a perfect example of the fact that hypocrisy is still alive and well in the Conservative party?

Sarah Teather: Something like thatI am not sure whether I would dare to use such a term, as it might be deemed unparliamentary, but I agree entirely with the sentiment.
	The Minister said that the Conservative motion entirely lacked policy proposals. The only one that I could find in it was to cut red tape, which seems to be the Conservatives' sticking-plaster option for all their policy gaps at the moment. But it takes bricks, concrete and builders to build housessolid, expensive and tangible things. The Conservatives' approach to house building is a little like one of those Etch-a-Sketch toys I had when I was a child. Everything is in outline, but the drawing dissipates as soon as anyone shakes it. The Conservatives are the party that invented the right to buy and prevented councils from reinvesting the full receipts in new homes, that slashed the Housing Corporation's budget and whose legacy was a catalogue of disrepair.
	Since 1980, about 2.5 million council properties have been purchased under the right to buy from a council stock that then stood at more than 5 million. The hon. Member for Welwyn Hatfield tried to make a point about the replacement of those houses, but I am afraid that the successive policies of both Conservative and Labour Governments have prevented councils from reinvesting the money from the right-to-buy scheme locally. That is why we have seen such a shortfall in social housing. Worse, the Conservative party would impose the same policy on housing associationsan idea that experts in the sector have universally condemned. Housing associations already face financial difficulty because of the climate of lending and the extent of their debt. However, the Conservatives want to remove their rental income and dwindle their asset base. The Conservatives are right about the problemthe Government have failed to tackle the housing waiting listbut they have offered us no solution today.
	There is no solution for my constituent Mr. Ahmed, a single man approaching his 60s. He is disabled, unable to work and struggling to care for himself now that his children have moved away. By any measure, he is profoundly vulnerable, yet he has been on the housing waiting list since 1984. After four Prime Ministerstwo from each main partypeople such as Mr. Ahmed have little or no chance of finding a home.
	In my constituency, if we continue building at the same rate but lose properties through the right to buy, it will take more than 200 years to house the 20,000 families who are waiting for new homesand that assumes that no families are added to the list.

Karen Buck: On that point, and the impact of the right to buy and a possible extension of the policy to housing associations, does the hon. Lady have the same experience as I do? In my constituency, approximately half the properties sold on several estates are now in the hands of property companies and multiple landlords. The argument that the right to buy automatically translates into home ownership for individuals and does not influence the total stock of affordable housing is therefore wrong.

Sarah Teather: I agree. There are elements of our constituencies that are very similar. However, I also know from colleagues in the south-west that some properties sold under the right to buy are now second homes for people who live in London and come down to holiday in them during the summer. The hon. Lady is right to say that the right to buy has not meant that those properties are left for people in the community.

Simon Hughes: Does my hon. Friend agree that there is an alternativea way to allow the occupant to get possession, while retaining the local authority's right to take the property back when the possession ends? The most progressive authorities in the countrySouth Shropshire comes to mindhave done that. It means that the properties stay with the community for local residents to take up tenancies after the initial occupation.

Sarah Teather: My hon. Friend is right. Last week, we debated proposals for community land trusts, which Liberal Democrat Members have championed for some time.  [Interruption.] The Under-Secretary is saying that the Government championed it, too, and the Conservatives are joining in

Iain Wright: We championed it first.

Sarah Teather: I am not going to get into that sort of competition, but I am pleased that there is all-party agreement on the matter. However, it does not detract from the point that the right to buy, without giving the money to local authorities to invest, has caused much damage and created housing need in local communities.
	One in 10 of my constituents lives in temporary accommodation. That is typical of many areas in Londonthe figure is even higher in some parts of the city. Most of them are in a poverty trap, with high rents and housing benefit meaning that they cannot afford to work. I have many constituents whose parents were in temporary accommodation when they were born, and they experienced all the regular moves and disruption to school work that that entails. Some of them are now having families of their own, still in temporary accommodation. A whole generation has been condemned to uncertainty and poverty. The misery and helplessness of those waiting for housing eats away at their existence. The Government's failure to tackle the problem is a betrayal of the people who elected them.

Justine Greening: I am trying to follow the hon. Lady's argument because, a minute ago, in reply to the hon. Member for Regent's Park and Kensington, North (Ms Buck), she mentioned her concern about the right to buy, yet the Liberal Democrat amendment would in many ways strengthen the policy by allowing local authorities to keep receipts. Is it the Liberal Democrat position that right to buy is good or bad?

Sarah Teather: I am amazed that the hon. Lady cannot grasp the point. I must have made it about four times in the debate, including in interventions on Labour and Conservative Front Benchers. Councils should be allowed to keep receipts from the right to buy and invest them locally. However, we do not want the policy to be extended to housing associations because it would disrupt their asset base. For those that are charitable organisations, it is even against their charter. I thought I had made that point clearly.

Jeremy Corbyn: Does the hon. Lady agree that far too few new buildings for council or housing association rent have been developed in the past 10 years or more? One problem is that, in local authority planning, the threshold is too high, so that most small developments, which are the norm in central and inner London, simply have no social element. For several years in my borough, less than 5 per cent. of all new buildings were for social rent.

Sarah Teather: The problem is that such properties are not being built under section 106 anyway.

Lynne Jones: I am prepared to say that the right to buy has been an unmitigated disaster. I will not go into detail, but if we are to encourage councils to build more homesI sincerely hope that we willhow will we prevent their asset base from being destroyed if the right to buy continues unabated?

Sarah Teather: Sometimes it depends on the subsidy offered under the right to buy. There are many variations to ensure that, especially in areas where there is a lack of stock, it is not degraded further. However, I accept the hon. Lady's point.
	The most important thing that the Government could do for families in my constituency and in constituencies across the country is to tackle the policy problems that prevent councils from building new homes. They should give councils back the receipts from the right to buy, as I have said many timesperhaps I had better say it again to ensure that Conservative Front Benchers understand meand they should give them certainty about their rental income so that they can plan.  [Interruption.]
	Maintaining social homes in Brent and many other parts of London costs more than can be raised through Brent's council tenant rents.  [Interruption.] There is so much hilarity that I shall repeat my point. When it comes to subsidy and housing revenue account, in places such as Brent and other constituencies in inner London it costs more to maintain those homes than can be raised by Brent's social tenants. Why should the responsibility for paying for the shortfall lie with council tenants in Cambridge, Chesterfield or Solihull? Why have the Government imposed an additional tax on council tenantsindividuals and families who already live on low incomes? Any subsidy should come from general taxation, paid for by people on a higher income, not the poorest people in council housing. The system of pooling council tenants' rent nationally amounts to a tax on tenants.

Julia Goldsworthy: My hon. Friend is making an excellent case. Is the housing revenue account not made even worse by the Treasury's retaining some of the funds, so that the poorest people not only pay for improvements in other areas but pay a tax directly to the Treasury?

Sarah Teather: I agree. The point was made earlier to the Minister, who tried to say that the problem was not new. Yes, it is an old problem, and it is time that the Government fixed it. I know they are consulting about it, and they say that they will conduct a review. Unfortunately, their current proposals suggest, as usual, that they have taken the title but not written the prose. I want the Government to reform the housing revenue account radically and introduce proposals as soon as possible.

Robert Syms: The hon. Lady makes a good point about the negative subsidy. It is a big disincentive to local authorities to maintain council housing and a big incentive to opt out or have stock transfer. In the long term, it will lead to poorer standards of council housing unless it is reversed.

Sarah Teather: I agree with the hon. Gentleman. It means that councils have no certainty about their income, thus making it impossible, when they are also losing receipts from the right to buy and do not know what their rental income will be from one year to the next, to plan.
	The plight of families waiting for housing will get worse with the recession. However, the ability of housing associations and councils to match the problem is getting weaker under existing policy. Housing associations say that building has ground to a halt as they are hampered by banks renegotiating existing loans and raising the stakes on new ones. Worse, they can no longer cross-subsidise developments through private sales and shared equity homes. As I said to the hon. Member for Islington, North (Jeremy Corbyn), councils that relied on section 106 agreements to get social housing built find that everything stops as private development stops.
	We must accept that, in the short term, a higher subsidy is required in many areas to keep homes being built. The Homes and Communities Agency has said that it is willing to be flexible. However, that needs to filter through to housing associations urgently. I think it will require the intervention of the Minister to ensure that that happens.
	We must keep building. If we stop building in this recession, when banks start lending again there will be a real danger of hyper-inflation in the housing marketneed does not go away because people cannot get mortgages, and people do not stop needing social housing because there is not enough available. If we stop building, we will lose the construction workers who build the homes that we need, and if we lose their skills it may take a generation to replace them.
	But the recession is also an opportunity. Land is cheaper. Homes are cheaper. However, the Government have invested just 200 million in the national clearing house scheme to allow housing associations to buy up unsold property. The Government say that they want to build to create jobs, yet they have brought forward just 400 million to build 5,000 new homes. That will barely dent the list of need in this country.
	Instead of spending money on a VAT cut that made little or no difference to most families in this country, the Government could have spent the money providing insulation for 1 million people languishing in fuel poverty and building 40,000 new zero-carbon homes. If the Government really wanted to offer a VAT cut, how much more useful would a cut in the rate for renovation and rebuilding be? Today the Empty Homes Agency has said that it expects the number of empty properties in this country to reach 1 million for the first time. If we really want to tackle both the social housing waiting list and the blight of derelict properties in our communities, such a cut would be a tangible change that would make it cheaper to bring those homes back into use.
	Finally, I want the Government to go further in trying to prevent the recession from increasing the number of people who find themselves requiring emergency social housing. The Council of Mortgage Lenders has estimated that 75,000 families will face repossession this year. We have seen a raft of announcements that provide solutions for small numbers of families who meet specific criteria, but the announcement that held out the most promise for the most peoplethe pre-action protocolis the announcement that suffers most from a lack of teeth. The Government urgently need to update mortgage law to drag it into the 21st century and give courts the powers to intervene if they see fit. I urge the Government to legislate and not to leave the problem until it is too late.
	Housing need is a serious and urgent issuean issue that causes devastation for millions in this country, traps whole families in poverty, ruins life chances and extinguishes hope. In the face of this depth of need, we have seen from the Conservatives a motion that is so shallow and narrow in its solutions as to be insulting to my constituents who desperately want help. The Conservative party needs to start taking the issue seriously and come up with a proper policy. That is the job of the Opposition, and the Conservatives are failing in their duty.

Clive Betts: This debate started very interestingly, when the official Opposition tried to institute collective memory loss about what happened before 1997. Those of us who lived through that period as local councillorsI was chair of housing in Sheffield in 1980, when some of the problems beganhave a slightly different recollection of how the problems that this Government inherited started.
	In Sheffield we were building around 1,000 council houses a year; people could walk into the housing department and get a flat almost on demand; and it took two to three years on the waiting list to get a family home. We had an ongoing building programme and a significant programme of modernising and upgrading our existing housing stock. In the next few years of the early 1980s, our housing investment programme was cut from more than 100 million to less than a third of that amount. That is why we got into the problems that we faced in 1997: not only did we stop building houses because there was no money, but we largely stopped modernising, leaving the backlog of disrepair to be picked up by the decent homes programme.
	I remember delegates from the association of municipal authorities, as we were then, going to see various Environment Secretaries in the Conservative Government. I particularly remember one meeting with the late Nicholas Ridley, at which we got cups of tea but no sympathy whatever. It was not just Labour councillors who were outraged, as we clearly were, at the end of the meeting; the Conservative councillors who had gone to report their problems had to be told, Well, simply stick up your rents to pay out of your revenue for long-term capital problems. That was the only answerit was not an answer, of courseto the massive backlog of disrepair that had been identified and which steadily got worse.
	That was the reality of the situation, and that was why we were in the position that we were in in 1997, when the Government understandably had to concentrate in the first instance on the problems of disrepair and repair the 40-year-old kitchen units, the 40-year-old bathroom suitesit was hard to call them that in most casesand the windows that leaked water, as well as the roofs and walls that were not fit for purpose. That was absolutely right. Indeed, one thing that the Government can be proud of is their investment in the existing housing stock and the fact that thousandsindeed, millionsof people's lives have been made better as a result of that programme.
	At the same time, we had the right to buy, although it was interesting that the Opposition spokesperson referred to commitments made by the Prime Minister previously to spend capital receipts on building new homes. Funnily enough, that is exactly the same promise that local authorities were given in 1980, when the right to buy was introduced. One Conservative Minister after another said, Don't worrysell your homes off to sitting tenants, and the money that you get from those sales can be reinvested by councils in building new houses.
	Of course, what happened was that the amount of money that was allowed to be spent was 25 per cent. of the capital receipts gained, which had to go into making up the shortfall in the repairs and modernisation programmes that had been cut by the Government. That is the situation that we were in. Virtually not a single penny ever went back into building new homes as we had been promised. That was a broken promise that created long-term damage and difficulties.
	Since the 1990s house prices have increased, which has meant that houses have become less and less affordable to people on low incomes who want to buy. We have experienced enormous pressure from the increasing numbers of people who want to rent homes. In Sheffield, we had 90,000-odd council houses back in 1980, but that number, including stock transfer, has gone down to just over half. If we have only half the houses that we had and if we have not been building over a long interim period, there will be pressures on the waiting list. That makes it rather difficult to understand why, when the Lib Dems were in power in Sheffield at the end of the 1990s, they knocked down several hundred family homes in the city. To put things into a historical perspective, that was a most enormous mistake for which they ought to be held accountable, so I have to smile a little when I hear their comments today.
	The hon. Member for Welwyn Hatfield (Grant Shapps) was right: this issue is about personal tragedies. When people come to my surgery with their housing problems, they all have very good reasons why they should be the top prioritythey are sleeping either at friends' or parents' houses; their families have split up; their homes are massively overcrowded; or they are living in poor private rented accommodation. In 2007, the figure in my constituency for allocations of three-bedroom family houses off the waiting list in Sheffield was 12. That is the problem. The shortage is of family homes in particular, rather than flats. If we are looking to build more homes in the future, I hope that we will concentrate on family homes.
	The problem is not just the number of houses we build but how we allocate them. I am waiting for the Government's response to the Hills report about our allocations policy and other management issues, because by changing the policy we could make better use of our housing stock. In particular, I understand that when pressure is put on the waiting list, and when there is a shortage, there will always be more and more priority cases. However, that means that people who have been on the waiting list for many yearsa constituent has written to me to say that he has been on it for 10 years and wants a moveare denied their right to a move, because there is always someone with a higher priority. My constituent says that around 90 per cent. of the homes that he now sees through choice-based lettings advertised by Sheffield Homes go to priority cases, whether those cases have arisen because of the demolition of properties or whether they involve homeless families or other people with a particular need.
	The Hills report identified one particular issue, by pointing out that in many cases people need to move within social housing in order to access work or be nearer families who can offer them child support so that they can access work. Those are important issues. Sometimes when a house becomes vacant, it should not necessarily go to the person at the top of the priority list. It might be that another tenant can move into that property and thereby release their home, so that in the end we have better allocations and better use of properties. That issue is something in the Hills report that I hope the Government will respond to positively and give guidance to local authorities about.

Jeremy Corbyn: The problem of the lack of family house building is not exclusive to Sheffield; it is a nationwide issue, and it certainly affects a great many people in London. Is my hon. Friend aware that exactly the same problem pertains in private sector developments, some of which have now been taken over by housing associations or local authorities? We now have a disproportionate number of large families in short-stay, temporary accommodation, living unrealistic lives and being forced to move from one temporary home to another.

Clive Betts: Absolutely. That is a major problem. The idea that children brought up in those housing circumstances have any realistic equality of opportunity in education, health or anything else is clearly nonsense.
	It is important to acknowledge that the Government have recognised that tackling the backlog of under-provision in social housing is a real priority. There are clearly immediate problems, which I will say more about in a moment. When the Communities and Local Government Select Committee, of which I am a member, produced its report on the supply of rented housing, it welcomed the Government's increased target of 45,000 homes a year, although we said we were not convinced that that figure was high enough. Given the evidence that Kate Barker and the National Housing Federation took, we should be talking about at least 50,000 rented social homes a year to deal with the immediate shortage and to do something to address the backlog.

Paul Truswell: Does my hon. Friend agree that we need to be much more robust with local housing targets for such cities as Sheffield and Leeds, to ensure that they are geared to meeting housing need rather than housing greed, as has been the case in the past? That greed has led to many flats being built, and it is now impossible to find occupiers or buyers for them.

Clive Betts: I absolutely agree with my hon. Friend. I was going to mention that later. Local authorities have an important role to play, not only as the providers of rented homeswhich I hope they will becomebut as the strategic housing authority for their area, to ensure that there is a proper match between the demands of families, in particular, for homes and the supply of homes across a range of different tenures and provision.
	The immediate crisis facing us alland facing the Government in particularis that section 106 deals are not going to be done in the present climate. In many parts of the country, section 106 arrangements have been responsible for more than half the social rented homes that have been built, but housing associations can no longer get the necessary private funding or the cross-subsidies from selling houses to provide rented homes. There is encouragement for local authorities to develop housing companies to enable them to build homes, but those companies are not going to get off the ground in the current climate because they, too, will have to rely on an element of private sector cross-subsidy to make the social rented homes affordable that the local authorities want to build.
	The reality is that if housing associations are going to build homes, they are going to need much higher levels of social housing grant. If the level of the grant remains at that indicated by the Government, fewer homes will be built by the housing associations as a result. I certainly welcome the Government's bringing forward finance to enable homes to be built more quickly, to address the immediate problems, but the solution is not just about bringing money forward; it is about increasing the amount of money available, in this spending review and the next. Even increasing the amount in this spending review would probably not lead to any more homes being built, because of the need for higher amounts of social housing grant for each unit of accommodation provided.
	In principle, I welcome the Government's commitment to allowing local authorities to build. Sir Bob Kerslake, chief executive of the Homes and Communities Agency, was here the other day talking to the all-party parliamentary group on local government. I think he would accept that, if local authorities are going to build in the current circumstances, they will need Government supportwhich I think they are going to get, at least in principleand, to quite a large extent, social housing grant from the Homes and Communities Agency. Also, local authorities are going to have to put in their own land for free to make these schemes work. I hope that the Government will make that clear and encourage them to do that. In the present circumstances, there could be no better use for local authority land than making it available for building social rented homes. These schemes will simply not stack up unless the local authorities are prepared to make that commitment, so I hope the Minister will encourage them to do so.
	I welcome the steps that the Government have taken to provide 200 million of resourcesalthough more might need to be provided nowto buy up empty homes in the private sector. We must be cautious, however, because, as my hon. Friend the Member for Pudsey (Mr. Truswell) said, there are many empty private flats that cannot be let or sold at the moment, and they are not necessarily the right properties for the social sector to buy. We need to concentrate on family homes. There are some interesting statistics available. Some local authorities are working with the housing associations to target that kind of property, but it is a great shame that the Lib Dem Sheffield city council has managed to buy two flats so far, and not one family home, with the money that the Government have made available. It should be ashamed of that.
	It is also important for local authorities to adopt a collective strategy across their areas, to ensure that all the Government's initiatives are made available to local people. The other day, one of my constituents went to see a representative of Sheffield city council. They were having desperate problems with their mortgage, and had been made aware of the Government's excellent scheme that will, in some circumstances, allow people to convert their mortgage into rent. The answer that they got back from the city council was, We know nothing about this scheme, and we haven't got any money. Lib Dem Sheffield city council should ensure that it is at least able to offer advice to people and point them in the right direction so that they can get access to this excellent scheme that the Government have promoted.

Bob Russell: Will the hon. Gentleman give way?

Clive Betts: I certainly will. I hope that the hon. Gentleman is going to defend his Lib Dem colleagues.

Bob Russell: I am hoping that the hon. Gentleman, as a good constituency MP, was able to furnish his constituent with the right advice to help him.

Clive Betts: That constituent is certainly in the process of getting that advice; we are in regular dialogue. We are also going to advise the city council that it could do a little better in its efforts to help local people.
	I also welcome the Government's scheme to help people who go on to income support. They will now get help with their mortgages after 13 weeks, rather than nine months. It is important to prevent those people from having to place demands on the social rented sector and make waiting lists even longer. I look forward to hearing from the Minister when the Government will be able to implement a similar scheme for families who have not gone on to income support but who have suffered a loss of family incomebecause of reduced earnings through short-term working or a family member becoming unemployed, for examplewhich makes it virtually impossible for them to pay their mortgage. At present, they cannot get access to such a scheme if they are not on income support.
	We are not going to roll back and unscramble the right to buy altogether. There have been some advantages to it, as well as some serious disadvantages, which have already been highlighted. The right to buy was about two things: it was about allowing people to get on to the home ownership ladder, and it was about breaking down some of the monolithic tenure areas in which every single property was a council house. In 1980, one ward in Sheffield comprised 99.9 per cent. council houses. The only non-council houses were the doctor's house and a few shops; that was it. The problem now, however, is that the opposite has happened. In some areas, all that is left is a tiny handful of social rented properties, and all the rest are owner-occupied, with a few in the private rented sector.
	Following the Select Committee's inquiry, we said to the Governmentwho I know are looking into thisthat local authorities in such areas should be allowed to suspend the right to buy until such time as there were more rented houses available. For example, in an area where it was possible to count on the fingers of one hand the number of family houses available for rent, unless the right to buy were suspended there would be never be any property available to young people who had grown up in the community and who would never be able to afford to buy, but who wanted to remain in the community for family or other reasons. Without being against the right to buy completely, I believe that there should at least be a strategic approach to deal with those problems in certain areas.
	Earlier, I challenged the hon. Member for Welwyn Hatfield about building new homes. The reality is that some communities will not want social housing in their area, whatever the incentives being offered. At a public meeting in my constituency two years ago, we talked about some new homes being built. Eventually, one person got up and said, Well, I suppose we might have to have some new homes in the area, but we don't want homes for those sorts of people, do we? We knew what he meant by that, and I stood up and said that everyone in the community, including those who could not afford to buy, had a right to live there if they had grown up there and wanted to stay. I said that we should be providing homes for rent. However, some communities will refuse to do that.
	Parliament has a responsibility to say that, right across the country, people who can afford only to rent a property have a right to live in their community. If we can get agreement with local councils to build homes, we should proceed by agreement, but if we cannot, Governments and this Parliament must retain the right to say that homes have to be built in those areas for the people who need to rent. In the end, the Opposition have to address that problem because there is a gaping hole in their policy in that respect.
	Finally, I am prepared to say that there may even be a role for the private rented sector, but not for the sort of shoddy landlords that we are sometimes used to who rent out squalid properties. There may be a case in the long term for involving the pension funds with investment in high-quality, private sector accommodation for rent. The organisations that build such properties should go into their long-term management rather than proceed on a buy-to-let basis. There are interests at stake here, so the Government should look at how to encourage these developments.
	There is also a responsibility to look further into the problems that the Select Committee saw when we went around homes in Westminster. We found that ex-local authority properties in tower blocks had been sold off under the right to buy, only to be sold off again, then rented out by a private landlord and managed by a housing association. Westminster council then put homeless families in them and was being charged 400 a week rent. Thus, a property sold with a public subsidy and discounts under the right to buy was subsequently massively subsidised by the taxpayer in order to put a homeless family back into the property.
	An organisation called Local Space, which is operating in Newham, Hackney, Tower Hamlets and one or two other London boroughs, is putting forward some interesting schemes. Instead of those housing benefits going to private landlords, they go into a housing association that has been set up to buy property, which will eventually become available for social rent over a number of years. Instead of the public subsidy going into the pockets of private landlords, it is going into housing association funds and it will eventually create more properties for social rent.

Lyn Brown: Does my hon. Friend agree that when we set up companies that may well put properties back into the public sector, as with Local Space, we must ensure that the model is not predicated on using the highest ever level of housing benefit, as that traps people once again in a cycle of dependency on benefits?

Clive Betts: My hon. Friend makes a very good point. I think that Local Space is offering a better solution than that of private landlords in these circumstances, although there are still some problems. I hope that Local Space will be able to work with the Government to address them. It represents an important step forward, but my hon. Friend is right to suggest that it does not provide the absolute solution.
	To conclude, the Government have an excellent record on their decent homes programme. It was made necessary by the complete absence of any attempt to improve and repair properties in the 18 years of Conservative government. We must now address the serious problem of the lack of supply of social rented housing. There are some immediate difficulties with the current housing crisis. I believe that the Government have to commit more funds to build homes in the future and they have to engage with local authorities here and now in order to get more housing grant to them and encourage them to put land into schemes to get more homes built. It should be a major priority for the next few years to put an end to the enormous personal tragedies that we all see on such a regular basis at our constituency surgeries.

Anne Main: The Government set themselves what I believe was an over-ambitious target of 2 million homes by 2016 and 3 million homes by 2020a significant number of which I assume would be affordable homes for sale or rent. I dispute the Government figures, particularly when we have so many perfectly useful homes lying emptya matter I shall touch on later.
	In response to my inquiry about skills shortages, the Minister for Housing said that she was dealing with the matter. The hon. Member for Sheffield, Attercliffe (Mr. Betts) is, like me, a member of the Select Committee, and I hope that he will reflect on some of the comments I am about to make about skills shortages, which I believe are further delaying the Government's delivery of their particularly ambitious housing agenda.
	What, then, are the main obstacles to the delivery of the Government's proposed housing targets? They are skills shortages in planning. In July, the Select Committee on Communities and Local Government, on which I serve, published its report, Planning Matterslabour shortages and skills gaps, regarding the lack of skilled staff in planning. Anyone living in a high-price area such as St. Albans will testify to the fact that it is extremely difficult to get experienced planners into the system and then to retain those officers.
	The Government published their response on 3 November 2008. To say that the Government have given a somewhat vague and lacklustre response to this report would be an understatement. If they are really serious about delivering their housing targets, however ambitious, and if they are really serious about cutting waiting lists for social rented housing and about speeding up build delivery, it would be logical to assume that they would be really serious about ironing out some of the obstacles or problems that appear to beset our planning delivery at a local levelobstacles and problems that have been pointed out to them by the Select Committee, most noticeably shortages of planning skills.
	Our Committee concluded in its report:
	Perhaps the most surprising, and frustrating, point to arise repeatedly from this inquiry is the fact that labour and skills shortages in planning are so unsurprising. They have been evident for well over a decade, but review after review, report after report, recommendation after recommendation have not resulted in their reduction. This must change.
	That is a damning indictment of 10 years of the Government's inability to tackle the problem. Although the Government acknowledged in their response that progress had been slow and that there was more to be done, they maintained that
	the Government is confident that there will be both a greater supply of people to work in planning, and that professionals working in local government will have a more appropriate skill set to do the work which is necessary.
	Where, given the years of inactivity that I have alluded to, do they get that confidence from?
	The Government's response contains little or no detailed commitment to specific action. We cannot build houses if the planning system cannot deliver them. Instead, the Government showed an over-emphasis on the roles of others, rather than themselves, and simply restated existing or past initiatives without any new proposals to deal with those acknowledged problems. Do the Government really expect us to accept that the constant assertion that progress will be made will indeed mean that progress happens?
	A key issue raised in the report was training for councillors in planning matters. Again, it was acknowledged that many councillors were expected to make complex decisions and that the turnover of councils sometimes means that there is little in the way of a training base for councillors. Again, we are led to believe that development is thwarted or held up through lack of informed decision making. Our recommendation 22 urged the Government specifically to address that problem, but in response to our request for councillor training, the Government simply agreed that it should not be compulsory and provided examples of where training was already given. One of their key examples, howeverthe Planning Advisory Service 1:1 support programmehas delivered training to only 36 councils, which is hardly a seismic shift in speeding up the planning upskilling that councillors need.
	The Committee's report concluded:
	The Minister for Housing and the Department for Communities and Local Government seem likely to continue to suffer from 'review-itis'
	I am not sure that that is really a word, but it appeared in our report
	until the repeated concerns expressed and recommendations made over the past 10 years are translated into actions that raise both the number of people who want to be planners and the range and level of skills they possess.
	So, instead of the decisive action that we urged on the Government, who have set themselves hugely ambitious targets to deliver more and more houses, they have buried their heads in the sand. The Government's response disagreed with, or failed to address, the key issues in the report's recommendations.
	Given the stated recognition by the Government that
	planning is crucial to the economic prosperity of the country
	and the acknowledgement that there are low numbers entering the profession, our report recommended annual assessment so that shortages could be addressed and more encouragement given to get more people into a profession that is so sadly lacking in critical numbers. However, the Government chose not to accept that recommendation; they simply gave a commitment to undertaking three-yearly audits of existing numbers of planners and of their skills base and needs. This three-yearly audit of trends implies a passive monitoring role on the Government's part rather than proactive engagement in, and pursuit of, a solution to this serious professional shortfall, which will no doubt hobble the Government's intention to build more houses. Why, if the Government want to speed up delivery, do they fail to accept the report's findings? I would like the Minister to answer that.
	In the case of planning skills shortages, the Committee was so concerned that it felt it had to point out to the Government:
	There is a significant risk that major Government targets for development and regeneration will be missed because our planning system is unable to manage either the volume or the variety of tasks it will be asked to perform between now and 2020.
	What is the Government's response? To do nothing. Perhaps the Minister will at least attempt to explain how even a reasonable percentage of those extra homes can be built when the Government have refused to address one of the biggest obstacles to delivering themthe lack of skilled planners.
	The Government's other glaring deficiency is their absolute failure to deliver their own legislation in the shape of empty dwelling management orders. As we have already heard several times today, the Empty Homes Agency has estimated that more than 1 million homes in the United Kingdom are empty. The vast majoritymore than four out of fiveare believed to be owned by private landlords. The Government have been intending to address the problem, but little has been done.
	The EHA estimates that of the 762,000 empty residential properties in England, 650,000 are owned by private landlords, and almost half are thought to have been empty for more than six months. According to the charity's own estimates, there are at least another 77,000 empty residential properties in Scotland and 50,000 in Wales and Northern Ireland. Surely, at a time when we are being pushed to build, build, build, if there are tools in our toolbox enabling us to return empty, serviceable homes to use so that families can live in them, that should be our first duty. I do not know why the Government have abandoned it.
	The EHA's chief executive, David Ireland, predicts that the total number of empty residential properties will pass 1 million, a prediction that we have heard again today. He has said:
	The situation is getting worse...Even these figures were compiled in October 2007, before the property downturn led to a rise in repossessions. We're at the beginning of a trend of rising empty homes, which is what we have seen at the beginning of other recessions.
	The Housing Act 2004 made provision for local authorities to take over the management of certain residential premises, but, in October 2007, the Government reported that only six interim empty dwelling management orders had been approved since that provision came into force, and very few orders have been employed since then. In November, in reply to a question asked by the hon. Member for Brent, East (Sarah Teather), the Minister for Housing revealed that only 15 had been issued15, when 1 million homes stand empty! In St. Albans alone, an extremely highly priced area, there are 1,500 empty domestic dwellings. The Government's council tax records show that, in 2007, there were 762,635 in England as a whole, so St. Albans is fairly typical.
	The Government are now quietly shelving the EDMOs. Although levels of homelessness are expected to rise, we shall have 1 million empty built homes along with the sclerosis in the planning system that prevents us from building the homes that are desperately needed. I pay tribute to the charities in my constituency that pick up the pieces for those 1,500 people: Centre 33, Emmaus and Open Door. I visit all of them regularly, and all of them tell me that this is a growing problem affecting homelessness in St. Albans, and a growing problem for all local authorities that cannot deliver fit and decent homes for people speedily enough.

Andrew Slaughter: Access to housing that is adequate in terms of both size and condition is by far the most serious problem for my constituents and, I suspect, those of many Members representing inner-London and other inner-city areas. The pressures related to schools and health care experienced by inner-London areas as a result of social deprivation and population mobility are exaggerated in comparison with those in other parts of the country, but the housing pressures that they experience are exaggerated to an even greater degree.
	Although I am pleased that we are debating this issue, I am frankly appalled by the trivial and content-free stance that the Opposition have chosen to take. This is student politics. They have picked a Labour issue on which the Conservatives have an atrocious record over many decades to see how far they can get with it. In the time available to me, I shall give a London perspective. I hope to demonstrate not only that this is a complicated issue, but that where the Conservatives are in poweras they predominantly are in London, at both regional and local levelwhat they are doing, often through deliberate policy, is the opposite of what the motion suggests.
	Housing waiting lists are a guide to housing need, although, interestingly, my local Conservative council says that they are irrelevant because anyone can sign up to them. The statistics on overcrowding or temporary accommodation are probably a better guide. They show that 75 per cent. of families in temporary accommodation are in London, as are 40 per cent. of overcrowded households.
	I am pleased that the Government are now investing, but their priority was dealing with conditions that had to be dealt with. I wish that investment to deal with housing supply and the size of units had begun earlier, because we are now having to play catch-up. As was pointed out by my right hon. Friend the Member for Greenwich and Woolwich (Mr. Raynsford), we should appreciate that the appalling conditions in which council housing had been left had to be addressed; however, because of the increase in housing needlargely due, in London, to the state of the property market over the past few years, which has not been redressed by the fall in priceswe need immediate investment to deal with the number and size of units.
	The problem is that the delivery arm of that necessary investmentwhich, in terms of both policy and action, consists of registered social landlords, local authorities and the Mayor of Londonis simply not reacting. The Mayor's housing strategy involved two significant factors, one of which was the removal of targets. I have heard the rhetoric, and I see it again in the motion, but I have yet to hear anyone explain convincingly how the absence of targets would increase the number of affordable housing units built in London. In the financial year ending in March 2008, the first year in which the Conservatives were responsible for housing starts in Hammersmith and Fulham, fewer than 5 per cent. were affordable housing starts.

Grant Shapps: Five per cent. of what?

Andrew Slaughter: It would have to be 5 per cent. of a very large number to make any contribution, and it certainly was not that.
	The other significant factor in the Mayor's housing strategy was the raising of the affordable housing income threshold to 72,000. Recently, during a debate in Westminster Hall, my hon. Friend the Member for Regent's Park and Kensington, North (Ms Buck) asked the hon. Member for Welwyn Hatfield (Grant Shapps) to what extent he believed people earning significantly more than Members of Parliament were a priority for housing need in London. I think that the hon. Gentleman has yet to answer that question as well.
	The principal culprits in relation to London's housing strategy at the moment, however, are the Conservative boroughs. Let me run through some of the policies that are currently in force. I shall be happy to give way to Opposition Members who may wish to say whether they support them. It is true that there is a decline in the property market, but local authorities still have a fair amount of section 106 money. My Conservative authority has said that it does not wish to use for the purpose of building affordable housing money given to it specifically for that purpose. When units have already been built or planning consent has already been granted, it wishes to return those units to the developer so that they can be used for luxury housing. That happened to 250 units on the Imperial Wharf site in Fulham last year. Apparently, those units50 shared-ownership and 200 social rentedwere not needed by a local authority with 8,000 people on the waiting list and more than 1,100 families in temporary accommodation.
	The Conservatives are quick to criticise the Government for not making Government land available, but Labour councils, when land was available to themit is at a premium in inner London now; it really is quite preciousused to pass it to RSLs, at nil value, for the development of social housing. Obviously that meant that the land went further: with the social housing grant that was available, it was possible to build more and cheaper units. Those bits of council land that do become available are now auctioned off to private developers or RSLs, with the consequence that the predominance of housing on those sites is either market housing or what is called intermediate housing, which is very expensive. As a result, most RSLs in west London are now property developers. They are not building affordable housing at all; they are simply building market housing or what is called discount market sale housing.
	The motion briefly mentions rough sleepingI think it crept in as an afterthought. Policy on that is dealt with in my local area not by the councillors who are responsible for social care, but by the councillors who are responsible for antisocial behaviour and crime. As a consequence, when the BBC offered us a night shelter and all the funding for it, that was refused by the local authority on the grounds that it might encourage undesirable elements into the area. The one large day-centre for homeless people in Shepherd's Bushthe Broadway project, which I sat on the board of for about 20 yearsis an excellent project operating from a purpose-built building, but the authority is seeking to withdraw its grant and to close it, because it believes it lowers the tone of the area.
	The key policies Conservative councils are pursuing are the disposal and demolition of social housing, and the failure to construct new units of social housing. In policy terms, we have moved from a situation in which 40 per cent. of all housing built in the borough was socially rented housingthat was under a Labour administrationto one where the target is 10 per cent. but the reality is zero; the real target is that zero units of new housing should be socially rented, on the basis that there is already too much socially rented housing in the borough. There is, in fact, 32 per cent. social housing in the borough, which is less than the inner London average, and, of course, any sensible person would say, Well that creates a need for more social housing, as families grow and houses are sold through the right to buy and so forth. In reality, however, the policy is that that is too much and we need less. Therefore, we now have situations such as that in White City, which is quite famous because the Mayor was caught out changing his mind: all the social housing was stripped out of a new development, contrary to what the tenants and residents of the area had been promised, simply to ensure that market housing was built on the site. That regularly happens across the borough.
	Last week, I attended a public meeting called by the leader of the council for tenants and residents of 800 council leasehold and tenanted flats in west Kensington. Rather than give my own no doubt partial version of events, I shall read the account that was published on the front page of the local newspaper. The headline was, Rich inherit the borough: residents seethe at council leader's plan to bulldoze homes to make way for wealthy to regenerate economy. The article reports:
	Householders reacted with anger and dismay to plans to bulldoze their homes as the council leader claimed he wanted 'very rich people' to live in North Fulham.
	Stephen Greenhalgh confirmed his redevelopment proposals for West Kensington and Gibbs Green estates as part of a wider revamp including Earl's Court and Kensington Olympia.
	Addressing a crowd of seething residents this week he declared: 'We want to attract people who are very rich if we want to boost the local economy.'
	 [Interruption.] So 800 council rented and leasehold flats are to be demolished to build an international conference centre, and no [Interruption.]

Mr. Deputy Speaker: Order. If Members wish to intervene, it is much more helpful if they stand up and do it in the usual way. Is the hon. Gentleman willing to give way?

Andrew Slaughter: Yes.

Justine Greening: I actually wished to make a point of order, Mr. Deputy Speaker. The concern I wished to raise is that the hon. Gentleman is making a speech about a constituency that is not his own; he keeps on referring to Fulham, which is represented by another Member.

Mr. Deputy Speaker: Members' remarks are in no way confined to their own constituencies. They may talk about whatever they like to talk about.

Andrew Slaughter: Is that really the best the hon. Lady can do? She is a near neighbour of mine as she represents Putney. That is also an inner-London constituency. Despite Wandsworth council's attempts over the years to move all the poor out of the borough, she must experience some of the same concerns as I do. I have invited Opposition Members to intervene on any of the examples I have given. I am speaking very slowly so that they can understand what Conservative housing policy means in practice in inner London. I have given about six examples so far; Conservative Members are yawning a bit and looking at their watches, and I am sorry if what I have to say is not more entertaining. I invite them by all means to challenge me and say whether or not they support their authorities' policies, but for the hon. Lady to come up with a point of such triviality just confirms what I have been saying.
	The second area I would like to look at is low-cost home ownership, because Hammersmith and Fulham council has put a huge amount of money into promoting that. I shall at this point respond to the hon. Lady's remark. She probably understands that even in Wandsworth housing allocation policies are done on a borough basis. Therefore, what happens in Fulham affects my constituents in Shepherd's Bush. The 200 homes that were given back, in a cosy deal, to a private developer would have been homes for people living in Shepherd's Bush as much as for people living in west Kensington and Fulham. Therefore, the hon. Lady's point is not only trivia, it is inane as well and I am sorry that it is the best she can do.
	No one is against low-cost home ownership; indeed, the previous Labour council in Hammersmith and Fulham brought in a much higher proportion and amount of low-cost home ownership than the current Conservative council. The real shift has been away from social rented housing to market housing. However, there is a problem with low-cost home ownership in London: it is not low cost. That is a problem for many authorities. On the council's own figures, the average income of people accessing low-cost home ownership in Hammersmith and Fulham is currently 38,422. The Conservatives would like it to be higher than thatthat is why the Mayor has extended the upper income limit to 72,000but an income of 38,000 excludes almost everybody in housing need; on those terms, the numbers we are talking about are almost in single figures. The vast majority of people on the low-cost home ownership register are not council tenants or those in temporary accommodation, and they are certainly not people who are disabled or people from black and minority ethnic backgrounds, because the council itself concedes that its policies discriminate against those classes of people as they tend to be on lower incomes. Already, people accessing this kind of housing are earning 40,000-plus, but 40 per cent. of households in the borough are on incomes below 20,000, and they are, in general terms, those most in housing need. This average figure is distorted by the fact that a lot of very wealthy people live in west London, but even the average income is only 28,000.
	The ratio in 2007I appreciate this might have changed, but not to a very great extentbetween average income and the average price of a home was 19; people needed to raise 19 times their average salary in order to buy a property in Hammersmith and Fulham. The general costs of shared ownership properties are about two thirds of market rates when one takes into account discount, rental element, service charges and so forth; that is the formula that housing associations and RSLs tend to work on. Even if the ratios are no longer as much as 19 and two thirds, it does not take much imagination to understand the sort of income level that people need to have to access low-cost home ownership property. This is a problem.
	Hammersmith and Fulham is the local authority that has made it an absolute testament only to invest in property for sale; it is not interested in property for rent whatever. So far this year, five properties have been sold under the right to buy, and about 40 people have accessed housing through the total raft of home ownership schemes. That includes through social homebuy. It speaks very highly of thatalthough I know those on the Opposition Front-Bench do notyet it has failed to sell a single unit through that scheme. So, the approach simply does not work.
	Low-cost home ownership is used by Conservative councils as a Trojan horse for doing nothing. They are happy for people on 50,000 or 60,000 to have a property that they would not otherwise be able to access unless they were on 70,000 or 80,000, but these so-called home ownership schemes are simply not a possibility for people on 20,000 or 30,000the key workers, and the people on low, average or even twice-average incomes. The Government need to take note of that, because we often all fall into the trap of saying that we are providing for people who just do not qualify for social rented housing when, in reality, we are not providing for that class of society at allthings are being done with extraordinary cynicism.
	The final point that I wish to deal with is slightly topsy-turvy, because although these policies are being pursued with some gusto by Conservative councils across London, their net effect is to keep waiting lists down. That is partly because of the temporary accommodation targets, which are a good thing, but they have unintended consequences. Conservative authorities, in particular, are looking at ways of keeping people off the housing register come what may, and that can be done through the crudest and cruellest measures.
	For the 25 years that I have been going to Hammersmith town hall, if a homeless family turned up out of hoursafter 4 o'clock and thus having not been able to get into the housing officethey would have to wait in the reception at the town hall until the emergency service could find them emergency accommodation. In such circumstances, people now have to wait outside the town hall, where a red phone has been put up. They speak to someone on the other end of the line and they then wait for one hour, two hours, three hours in the rain or the cold because they are not considered fit people to wait in the town hall foyer of an evening. Staffing, too, has been considerably cut back.
	These are all old tricks learned from Wandsworth and Westminster in the 1980s. There is a story that may be apocryphal, although I do not think it is, that back in the early '80s Wandsworth council closed its housing advice services and put a map on the front door showing the way to Hammersmith and Fulham town hall, because that is how much it was interested in people in housing need in the area. The messages are unmistakable. If a Member of Parliament writes in to complain about somebody who is wrongly banded in an allocation scheme or who has been waiting an inordinate amount of time, they receive the most cursory letter back emphasisingit does not apologise or give an explanationthe length of time people would have to wait to access social housing. These letters say, For this type of property, the wait will be a minimum of 12 years. Everything is geared to encouraging people not to register, to move out and to go somewhere elsethat is the policy. It is not surprising that that is the policy, given what I said about the absolute decline that has taken placethe demolition and sale of housing, and the failure to build it. In such circumstances, of course these councils cannot cope with more people on their waiting lists.
	Someone who does manage to see a housing adviser at Hammersmith and Fulham will be pressurised into signing a form that says that they do not wish to go on to the housing register. What they will be given instead is a little assistance with accessing housing benefit and possibly with a deposit. They will then be introduced to a friendly private landlord who will offer them a propertythis is called direct lets. Typically, it will be an ex-local authority propertyunder some of the schemes that we have heard aboutin another borough, it will be vermin-infested and it may not have gas or electricity. But the council does not mind that, because the person will be not only off the list, but out of the borough. The relationship that local authorities have with some very dubious landlords of this kind simply in order to be able to prevent people from accessing social housing or even getting in the queue for it is, again, something that the Government need to examine. The irony is that this system means that the housing waiting lists are lower than they perhaps otherwise would be. I do not deny, and have never denied, that this is an issue with which the Government must come to terms; it will not be resolved by local authorities in London.
	I shall give one more example, because it was used earlier in relation to temporary accommodation. There is some good council-owned temporary accommodation in residential streets throughout the borough of Hammersmith and Fulhamnot only in Shepherd's Bush and Hammersmith, but even in Fulham. That is being sold off for auction; in other words, the families who are in those properties are being moved out. Either these families jump the queue, which is good for them, but bad for others on the list, or they go into private sector temporary accommodation, which is, again, usually outside the borough, and the taxpayer will be paying up to 700 a week in housing benefit charges. Again, the council does not mind that, because it gets a capital receipt for selling off the property in the borough. The council also does not mind that the total cost to the taxpayer might have been 100 or 200 a week when the family was in the original accommodation and will be 700 a week in the new accommodationafter all, it is not the council's money; it is the Government's money.
	This approach is being taken on every possible criteria and in every possible area of policy. What is the reason for that? Part of the reason is social engineering and, indeed, political engineering. The Tories who are running London make Shirley Porter look like Joseph Rowntree in terms of that degree of policy. A deeper motivation is involved, which came up in the Tory policy review. I have put this to the Opposition spokesman on many occasions and he wriggles a bit. The press release put out by my local Conservative council celebrating the overturning of targets states:
	Council housing can be a great safety net to help get people back on their feet, but that should be all it is. Council housing is a springboard  not a destination.
	That is what lies behind the Conservatives' housing policy, and these authorities are simply a stalking horse for what I believe we will see if they get into government; permanent council housingrented housingis no longer considered to be an option, which is why we will see right to buy in respect of registered social landlords and why we will see no new building, despite what is said here. We have heard nothing from them to say where the money will come from for that building. We will see a continued pressure on the most pressurised part of our societypeople who live in housing needwith all the socially detrimental effects that we all know that has in terms of schooling and health. This is a deliberate policyit is not incompetence and it is not down to a lack of money or resourcesof studied cruelty, which the Conservative party has decided to put into effect. It has certainly done so in London, and I suspect that it has done so in other parts of the country too.
	That is why I say that despite this welcome opportunity to debate these issues, rather than making the trivialising and schoolboy points that we have heard, the Conservatives should look at what they are doing to a significant sector of our societypeople who are being marginalised and punished for nothing more than not having the means to afford good quality housing in our capital city.

George Young: It is a pleasure to follow my successor but one, the hon. Member for Ealing, Acton and Shepherd's Bush (Mr. Slaughter). I was not surprised to hear that housing remains the most challenging problem for his constituentsit certainly was for the 23 years that I represented Ealing, Actonbut I must say to him that he overstated his case. Accusing my hon. and right hon. Friends of having a housing policy of studied cruelty is absurd, and saying that it is our intention to punish poor people is a parody of my party's housing policy. I honestly do not think that that sort of language advances very far what should be a serious debate about housing.
	I wish to pick up a point made by the hon. Member for Sheffield, Attercliffe (Mr. Betts). I am sure that some communities are resistant to more social housing being built, but other communities do not have the rather narrow vision to which he referred. There is a village in my constituency in Hampshire that is accommodating all the extra houses required by the local plan and still has taken the view that there is not adequate social housing in the village. There is a move to sell off the allotments owned by the village and relocate them at the edge in order to provide more social housing in the middle of the village, over and above that which it has to provide. The reason for that movement is that the village is in controlthis is not additional housing being foisted on it by a remote authority; it is local people seeing a local need for houses for the teachers, the postmen and the nurses, and wanting to make that provision. So, there is another side to that coin of resistance to new housing.
	I do not want to fight old battles, although there is a real temptation to do so, given that some of the speeches we have heard have gone back to the 1970s, the 1980s and the 1990s. However, I will say that the introduction of the right to buy was a progressive and enlightened social reform that was bitterly resisted by Opposition parties at the time. It enfranchised millions of people and made a reality of home ownership for people for whom it had previously been a dream. It transformed monolithic local authority estates and generated large sums of money that either reduced public debt or were recycled back into new housing. I make no apology for being a keen supporter of the right to buy when it was introduced.
	Other policies were bitterly opposed at the timehousing action trusts and large-scale voluntary transferbut are now an accepted part of housing policy. They are the foundations on which housing policy is now built.

Bob Russell: Will the right hon. Gentleman give way?

George Young: I hope that the hon. Gentleman will not invite me to fight old battles.

Bob Russell: I just wanted to ask the right hon. Gentleman whether he agrees that if the proceeds from the right-to-buy policy had been invested in new housing stock, we would not be in our present situation. Will he acknowledge that connection?

George Young: I was a housing Minister in the 1980s, and the receipts from right to buy tended to clock up in Tory-controlled boroughs outside the cities. We prevented them from spending those receipts and we recycled the spending power into the inner cities, which were not generating right-to-buy receipts to the same extent. That was not a popular policy with my colleagues, but it was the right thing to do. So it was certainly the case that we stopped some local authorities spending their capital receipts, in favour of areas of greater need.
	With the benefit of hindsight, the Government must be wishing that the 12 billion spent in December on the VAT reduction had been spent, at least in part, on helping those in housing need. Instead of an imperceptible reduction in retail prices, the money could have been used to buy up land at low prices; build out sites with planning consent; buy properties overhanging the market; increase grant for section 106 schemes frozen in the pipeline; and put more resources into the mortgage rescue scheme, helping those in housing need and threatened with being homeless. We would then have had something tangible to show for the huge debt that the Government have clocked up in our name. We would have had some assets on the other side of the balance sheet.
	If people are in housing need, what matters to them is not the number of new homes being built, but the number that are re-let. That is the currency that really matters. I was disappointed to readI think that it was in  The Times last Saturdaya badly informed piece attacking the tenants incentive scheme. If one wants to provide a new home to rent to someone on the housing list, it is much cheaper and quicker to encourage someone to move out of an existing local authority or housing association home and re-let it. It is perfectly acceptable to say to people whose circumstances have improved since they became the tenant of a registered social landlord, Can we help you achieve what may be your ambition of becoming a homeowner? In that way, public money can be used to generate a re-let and increase turnover. I hope that the tenants incentive scheme and related schemes will remain part of the portfolio, and that the Government do not fall for the criticism that I read last Saturday.
	A constituent who came to see me at my advice bureau a few days ago said, Why are the Government putting so much money and energy into rescuing the motor industry and not doing nearly so much for housing? He had a good point. I note in passing that both the motor industry and the construction industry have as their sponsors experienced Ministers who left the Government when Tony Blair was Prime Minister, but who came back last year at the invitation of the Prime MinisterLord Mandelson and the Minister for Housing.
	We all have sympathy with those who work in motor manufacturing, but I start from the premise that people need homes more than they need cars. In the motor industry, there is excess supply and inadequate demand, as pictures of cars stacked at docks constantly remind us, but when it comes to affordable housing, there is excess demand and inadequate supply. So, to the neutral observer, the case for additional Government support is far greater for housing than for motor manufacturing, especially as houses, by definition, are manufactured locally, whereas a good percentage of the cars we buy are imported.
	My constituent had a good question. Why, since the beginning of the year, have we had statements, initiatives and publicity on the one, but not on the other? It may be because the motor industry is better organised and located in politically sensitive areas. Whatever the reason, we need to redress the balance, and I hope that in the next few weeks we will have an announcement of support for the housing and construction industries. The 12 billion spent on VAT reduction was a wasted opportunity, and I wonder what housing Ministers were doing during the debates before that decision. Did they make their case forcefully?
	I wish to be brief, as many hon. Members wish to speak, but I want to touch on two options, one a dead end and the other a possibly useful way forward. The dead end is a return to council house building. I have nothing against local authorities building houses, but it is not a sensible use of public money. As Bob Kerslake said in  Inside Housing last week:
	The problem is that the HCA has been forced to treat money councils borrowed to build homes, on top of grant, as public subsidy. If a housing association bids, only the grant is counted as public subsidy, making council schemes more expensive to the public purse.
	So anyone who wants to get more homes for a given amount of public money will route the money through housing associations, not through local authorities.
	The pressure to build council houses is not coming from those on the waiting list. All they want is a good quality home, at an affordable rent, with a responsible landlordthey do not mind whether it is a local authority or a registered social landlord. The pressure to build council houses comes from councils that do not realise that the world has moved on and that they now have a strategic and enabling role, rather than one as a direct provider.
	The Prime Minister has raised false hopes on this front. Speaking at the New Local Government Network, he said:
	If local authorities can build social housing in sustainable communities that meets the aspirations of the British people then we will give them our full backing and put aside anything that stands in their way.
	Elsewhere he inserted the key phrase cost-effectively. When he was Chancellor, he was pressed on several occasions to change the rules to allow local authorities to borrow without that scoring against public expenditure, and he refused. It would be an astonishing U-turn if he now agreed to that, especially as we now have an independent body in charge of the definition of public borrowing. Those who believe that the resumption of council house building will solve our problems are crying for the moon. A much more promising option is not mentioned in any of the motions, but it would help those on waiting lists and in housing need. It is to revive the debate about getting private institutional funds into renting, through housing investment trusts or real estate investment trusts. For 15 years, there has been an all-party consensus on the need for a new investment vehicle to promote investment in residential property that would attract long-term institutional funds, broaden the market, give a wider choice to those who want to rent, help those on the waiting list and enable private and institutional investors to get exposure to the residential property market that they cannot get at the moment.
	Such trusts were envisaged as the last stage of a series of reforms to promote the increased supply of good quality rented housing. We introduced assured shorthold tenancies to put tenancies on a viable basis. Once we had that underpinning the private rented sector, there was going to be a new fiscal framework to get serious, respectable, long-term institutional funds into property for rent. At present, such institutions can get exposure to equities and to commercial property, but not to residential property. Such trusts would allow that exposure. No one knows whether we are at the bottom of the property market, but we are a lot closer to it than a year ago. There is therefore a real appetite to invest now, with billions of pounds available, as long as we have the right investment vehicle. Unfortunately, the Government have been very dilatory.
	In March 2004, the Treasury consultation paper said that a real estate investment trust
	structure in the UK would therefore set a challenge for the industry to encourage development of new housing, which could...be managed within
	that structure. It continued:
	The Government is keen to encourage greater renewal in the property sector, and the development of new...residential buildings.
	In 2006, the then Chancellor said in his Budget speech:
	To attract more capital into house building, we are now legislating to introduce for Britain the real estate investment trusts that are so successful in the USA.[ Official Report, 22 March 2006; Vol. 444, c. 293.]
	However, nothing has happened since. The only investment trusts have been in commercial property and pubs.
	At a meeting with Bob Kerslake a few days ago, I was interested to hear that that dialogue is being revived, at long last. With public expenditure now stretched to its limit, we need a fresh look at how institutional funds can be harnessed to tackle the needs that my hon. Friend the Member for Welwyn Hatfield (Grant Shapps) mentioned so eloquently in his opening speech. It is going to need some flexibility and lateral thinking, but the time is right for a fresh initiative. I hope that the Minister, when he winds up, will tell us that that option is being actively explored, as I believe that it would offer very real benefit to those in housing need.

Nick Raynsford: First, may I draw attention to the interests declared in my entry in the Register Of Members' Interests? Secondly, may I say what a pleasure it is to follow the right hon. Member for North-West Hampshire (Sir George Young)? I followed him, although not quite so immediately as this afternoon, in the role of Housing Minister. Both of us know, as do almost all hon. Members, just how important housing is to the lives of our constituents and how crucial an effective and good housing policy is to ensuring social well-being and economic prosperity for the country.
	Housing is an issue that has commanded considerable political salience throughout much of the past century, but the policies adopted at various points during that time have not always been as intelligent and far-sighted as they might have been. In the period immediately after the second world war, and for much of the following three decades, the focus was remorselessly on numbers. It was understandable why numbers were seen as important, as we were dealing with the backlog of wartime damage, dereliction and the fact that no homes at all had been built for some years.
	However, the danger with the remorseless focus on numbers that was very much the driver of housing policy at that time was that other issues tended to be given a lower priority. The remorseless focus on numbers displayed today by the hon. Member for Welwyn Hatfield (Grant Shapps) will not do a service to the country if his remarks serve to draw attention away from the equally important issues of quality, sustainability and the need for appropriate mixed-tenure developments that provide a decent environment for people to live in.

George Young: Will the right hon. Gentleman apply his criticism to the Government's target of building 3 million homes by 2020?

Nick Raynsford: I was going to say that all Governments have tended to adopt that approach. It is very easy and simplistic. A politician under pressure is likely to say that he will deliver numbers. Nye Bevan did it immediately after the war when he increased the housing output dramatically. Harold Macmillan did it in the 1950s: he promised 300,000 homes a year and delivered them. Harold Wilson said, I'll go one better, I'll do 400,000 homes a year, and he did it.
	In their own terms, those politicians were successful, but the legacy was not so successful. When the right hon. Gentleman was Housing Ministerand this was still the case when I was in the posthe had to deal with the problems associated with an excessive focus on quantity not quality. Those problems were partly seen in the very unsatisfactory council estates that were often badly designed and shoddily built, and which above all were inadequately maintained. Many of them had to be either demolished or substantially remodelled at enormous cost.
	However, an equal problem involved the many very unsustainable private housing developments that were often built on greenfield sites to unsustainably low densities. Their very poor energy efficiency has left us with a huge legacy of homes that are very difficult to keep warm economically and which contribute massively to global warming through carbon emissions. So let us not go down the route of focusing uniquely on numbers and forgetting the wider issues that are vital to a good and sensible housing policy.

Bob Russell: Is the right hon. Gentleman saying that people must be sacrificed? He must accept that people need to be housed, yet people are numbers so housing them must be a question of numbers. If we go for quality rather than quantity, what happens to the surplus that does not meet the quality criteria?

Nick Raynsford: Of course we have to be responsible about meeting demand, but focusing remorselessly on numbers was a problem in the pastand I am afraid that it was the problem with the speech from the hon. Member for Welwyn Hatfieldas it meant that quality and other issues tended to be forgotten.
	The result of such thinking is that dwellings have to be demolishedand this Government had to demolish hundreds of thousands of thembecause they are unsatisfactory. That is a vast waste of resources that could be better spent, and I put it to the hon. Member for Colchester (Bob Russell) that the problem cannot be resolved by increasing numbers in a simplistic way. Instead, we need a housing policy that addresses a range of issues, only one of which is quantity.
	When we came into government in 1997 there was a huge backlog of substandard housing, as has already been noted. The bill to put right all the disrepair in the social housing sector alone came to 19 billion. There was also a problem with unsustainable patterns of development, and the disproportionate building at low density on greenfield sites quite rightly provoked public anger and led to charges that the countryside was being concreted over. In fact, the legacy belonged to the previous Conservative Government, but the new Opposition were quite clever about shifting the political responsibility and blame on to the present Government. However, the legacy that I have described was the product of unsustainable patterns of development, and that policy had to be changed.
	There was also a problem of social division that resulted from a curious aberration of housing policy in the 20th century. For the first time in human history, to my knowledge, a policy of social apartheid was deliberately adopted. Estates were created with uniquely owner-occupied housing in some areas and uniquely social housing in others. The two never met.
	I am open to correction, but it seems to me that one can look back to the 18th or 19th centuries, or back to mediaeval times or even before that, and see that although richer people obviously enjoyed better housing, communities did not suffer from rigid social stratification with areas treated exclusively as the preserve of only one social class. That was a pernicious influence, and it needed to change.
	That is why I say that a good housing policy has to be about more than just numbers: it has to be about the quality, style, location and mix of a development too. The incoming Labour Government put in place measures to tackle precisely those problems. The decent homes programme has been a very significant success, as I think hon. Members of all parties must accept, and it has helped to turn around the huge inherited problem of the backlog of disrepair in the social sector. Moreover, the change in emphasis away from greenfield development and the greater focus on brownfield development have undoubtedly helped to reduce pressure in the countryside, while the work to try and get acceptance for mixed-tenure developments has been very important, especially in the long term.
	That was not an easy task, as the house building industry was strongly resistant. Its members wanted to go on building in the patterns that they had traditionally used throughout most of the post-war era and with which they felt comfortable. Getting them to accept that it was desirable and appropriate to build mixed-tenure developments with some social housing, some intermediate housing and some housing that was for sale outright took time, but we got there and the industry accepts that mixed-tenure development is appropriate.
	The house building industry also accepts the need to improve hugely the energy performance of housing. I was Minister for construction in the very early days of the present Government, and I remember the resistance among housebuilders to the change in part L of the building regulations that was designed to improve energy efficiency in housing but which they saw as a burden and an undesirable imposition. Fortunately, the industry is now engaged in a constructive dialogue with Government about how to achieve the hugely ambitious target of zero carbon emissions by 2016. That will not be at all easy to achieve, but the fact that housebuilders are engaged in the dialogue represents a sea change in the industry's attitude.
	I am aware of some of the developments that have been achieved, and one of them is the Greenwich millennium village in my constituency. I live there, and it is frequently talked about: a mixed-tenure development of very high-quality housing, with a lovely environment, it has excellent transport linkages, a school and a health centre. It was built on sustainability principles, and it works. Such exemplars exist and we should be proud of them. We should talk about them more and promote them, but unfortunately all the processes of change take time.
	My local authority is Greenwich council, and it was awarded the beacon council award for new housing development precisely because of its support for developments such as the millennium village. Part of the beacon council arrangement is that people from other authorities are invited to come and learn from the ones that win the award, but many of the people who came to Greenwich did not believe that it was possible to use section 106 and other such mechanisms to achieve that sort of development. That is a politics and social policy issue; it is a question of effecting change, and getting people to see what can be done.
	Using new mechanisms better takes time. All the changes have taken time, and I accept openly that there has been a problem of an inadequate supply of new housing. The irony is that just before the impact of the credit crunch was felt, there was a rising trend in new building, both in social housing and market housing, as a result of the Government's increased emphasis on output. We were approaching a figure of 200,000 homes a year, and the objective of 240,000 homes a year by 2016 was not unreasonable. Things have totally changed. We are living in a completely different world. The impact of the credit crunch, the withdrawal of mortgage facilities from large numbers of people, and the inability to maintain the traditional development model of cross-subsidy from market housing to social housing have all created huge problems in delivering a homes programme on a decent scale.
	Fortunately, there is one bright spark in the otherwise grim situation, and that is the creation of the Homes and Communities Agency. For that, I give great credit to the Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Hartlepool (Mr. Wright), who will respond to the debate, and who took the Bill that created the agency through Parliament. The creation of the agency was a really positive move. I am sorry that the Opposition were opposed to it at the time, and cast all sorts of doubts on the agency; they must now recognise that in this extremely difficult period, the agency is the one body that gives us a chance to achieve a sustained housing programme of some capacity to meet needs.
	The agency has some very difficult tasks. It has to help to prevent the current level of repossessions from undermining confidence even further. It has to ensure that developments that would otherwise have stalled are helped to proceed through the judicious use of investment. It has to try to maintain capacity in the construction and house building sectors. It has to ensure that the housing association movement can continue to develop when its traditional model, based on cross-subsidy from sales to rented housing, is no longer effectively workable. It has to ensure that a range of standards that make housing desirable continue to be met, even though the industry is increasingly resistant to meeting the high standards expected of it because of financial pressures.
	The agency has a hugely difficult task, but we are lucky that it is there, and very lucky that it is led by an absolutely first-class team, headed by Sir Bob Kerslake. His colleagues on the agency's senior management team are a very experienced and high-calibre group of people. I am delighted that we have their expertise to help us through extremely difficult times.
	What is required is not sloganising or simplistic political debates, but a serious analysis of how we guide ourselves through difficult times, how we build as many homes as possible in these difficult circumstances, and above all, how we ensure that they meet the quality and sustainability objectives that we now understand are fundamental to good housing policy. For that reason, I do not believe that the Opposition's motion merits support. I hope that it will be decisively rejected.

Robert Syms: I declare my interest, as set out in the Register of Members' Interests; I am the director of a building company and a property company, and have one or two other entries.
	This is an interesting and important debate. Unemployment did not quite break the 2-million mark today, but many Members see people with housing problems in their surgeries. It is fairly clear that many of the people who come to see me time and again with great, long-term problems have difficulties that date from their being caught with negative equity in the early 1990s, when my party was in government. They have never quite recovered from the housing difficulties that they faced then.
	The difficulty today, as opposed to 10 or 15 years ago, is the level of personal debt; mortgage debt is far higher. I fear that as unemployment rises, the consequences for individuals will be pretty severe. One welcomes any kind of assistance with mortgages, but the reality is that if somebody is out of work for any time, they will get into financial difficulty. If there are two people in a household who work, and one loses their job, the household does not necessarily qualify for mortgage help. The rules mean that those who are highly geared up, in particular, will face problems. As we heard from my hon. Friend the Member for Welwyn Hatfield (Grant Shapps), our Front-Bench spokesman, the figures show an increase in the number of people on the waiting list for social housing. I think that in the next two or three years, there will be a large growth in those figures.
	There was not much that I could disagree with in the speech of the right hon. Member for Greenwich and Woolwich (Mr. Raynsford); it was a well-turned speech on housing policy. Numbers are not the only issue, although they are important. The difference between this country and the United States of America, which has surplus housing, is that longevity and divorce mean that there will be continued housing demand here in the long term. However, we must ensure quality housing, and we must manage our housing stock better. Financial or tax incentives to manage our housing stock better are necessarily far more productive than sallying forth with targets for 3 million homes.
	We should bear it in mind that there are some 2 million empty flats over shops, and local authorities and social landlords still have quite a lot of void properties. There are far too many empty properties in the private sector, and a lot more could be done to use existing housing stock to house people. We have to consider the issue as a whole if we are to provide housing, that most basic requirement. My right hon. Friend the Member for North-West Hampshire (Sir George Young) mentioned the difference between the car industry and the housing industry. He was right; it is important that we house people, because the consequences of poor housing for families and children are substantial. I am on the Health Committee, which is looking into health inequalities, and the issue of housing tends to come up fairly regularly in relation to health inequalities. The issues are intricately linked.
	In the brief time available to me, I would like to raise an issue that I mentioned in an intervention. We are fortunate in my area to have Poole Housing Partnership, an arm's length management organisation. It does a very good job in providing housing for people. It is still within the housing revenue account system. This year, it is paying 3.4 million of negative subsidyin other words, it pays that amount into the pot. Next year, it is expected to pay 4.5 million into the pot, which is about 20 per cent. of council rents. Our area has high housing costs, and we have a waiting list as a result. Social housing has to take the strain. Local people find it difficult to understand why, when they pay rent to Poole Housing Partnership, that money is recycled elsewhere and goes towards national public policies. It was pointed out in an intervention that if it is right to subsidise council rents, the subsidy should come from general taxation; it should not be other tenants who subsidise council rents. That is a powerful point.
	We are heading towards the decent homes standard, which is good; I think that we are all in favour of that. However, many authorities and arm's length management organisations will find it difficult to continue to maintain their houses at a decent standard if the sums that I have mentioned are to come out of their budgets. Poole Housing Partnership is worried that the current system may not be sustainable in the long term because of the sums that are taken out of the rents. Those sums could be spent on maintaining properties, reducing the number of void properties, and providing a real service.
	I make a plea to the Minister. I know that the issue is under review, and that there are no magic bullets. I know that things are difficult, because if we ended the system, there would be complications and difficulties elsewhere, but my constituents, particularly those in council housing, find it difficult to understand why they are subsidising other parts of the country. They have a good arm's length management organisation in Poole Housing Partnership; they will not forgive it if, in the long term, it has to become part of a bigger organisation because of the method of financing.
	As we all know, housing is a basic service. It is important to our constituents. The point that my right hon. Friend made about the VAT reduction was valid. Given the situation in the building industry, the number of surplus building workers, and the fact that there is potential housing land on the market, the money could have been much better spent on a long-term objective that would meet the demand that many of our constituents want met.

Bill Wiggin: I am pleased to follow my hon. Friend the Member for Poole (Mr. Syms), and I shall keep my comments short so that the hon. Member for Colchester (Bob Russell) can contribute.
	I shall speak about rural housing. Over the past five years alone, the proportion of rural households that form part of the national homelessness figure has more than doubled from 16 per cent. to 37 per cent. of the total. There are more than 700,000 people joining rural housing waiting lists. The rural housing time bomb is not ticking; it has gone off.
	In Herefordshire, numbers on housing waiting lists have risen from 3,218 in October 2002 to 5,507 today, including 164 homeless households. There are just 10 to 15 housing association properties available each week. Young families are not only priced out of buying houses, but see themselves as just a number on a list. Without a gold band from Home Point, they have no chance of getting a house in my constituency.
	I have heard appalling stories, the worst of which concerned a child molester who had been released from prison on early release. He had come back to the property in which he had lived before, which happened to be on the other side of the garden fence from his victim. To get that family out of that house took a considerable effort. I have no criticism of excellent local housing associations such as Marches, but when we see what such people are going through, our heart goes out to them. They face a very tough situation.
	The targets being set do not contribute to solving those problems; in fact, they distort the communities that they are meant to help. Targets overwhelmingly dominate local planning. The wonderful section 106 solutions that could have been used to provide local housing for local people are put to one side, and we see people coming from outside my constituency who, in some cases, are even more desperate for housing. They are parachuted in, so all those well thought out ideas do not deliver the housing that we need.
	In Bargates in Leominster, an old Army base that became a turkey factory now has planning permission for 440 new homes. That is a significant number in a town the size of Leominster, which has only 10,000 people. My fear is that not only have those building plans been put on hold, a point that the Liberal Democrats raised earlier, but there is no way in which those houses will be built in the current economic climate. Because it is a large scale development, nobody will be able to build the one or two houses that are urgently needed, so nothing is happening.
	On top of that, Bargates in Leominster already has such a significant traffic problem that I suspect that even rural Herefordshire will fail to meet the European emissions standards for traffic fumes. That is equally relevant to the debate, because without the necessary infrastructure it will be impossible for people to live in the houses that are planned.
	Hereford city contains the Edgar street grid, and we need to be far cleverer about the houses that we are building. The city desperately needs its inner core rebuilt, and the houses that are built must not be for just one sector of society. The right hon. Member for Greenwich and Woolwich (Mr. Raynsford) was right when he said that we must not have segregated societies. We need some housing of each type. We cannot expect a business to relocate to Hereford, for example, if the only person who can find a house is the managing director. Different types of housing are needed for different types of people, according to the money that they have to spend and according to the incomes that they expect to receive. We need a far broader and more localised solution to the problems facing us.
	When I talk about local planning, I cannot help but mention the Reves hill wind farm that is being foisted upon us in probably the most beautiful part of the most beautiful county in the whole of England. I have no objection at all to renewable energyindeed, I believe passionately in it, but it must be appropriately sited. I hear hon. Members on the Government Benches laughing, thinking that areas of outstanding natural beauty where there are severe restrictions on what can be built should immediately be turned into wind farms.
	There are good places where wind farms are appropriate, but when one sees the number of objections, one realises that the Reves hill project is entirely inappropriate and does immense damage to all those who believe in renewable energy. How on earth will we persuade people that that is good technology that is needed if we dump it in places where it is wholly inappropriate and ruins a community? We must get this right. The balance is totally out of kilter and it is wrong. I hope the Government will listen to the letters that I have written to them and call in that decision, which is wholly against the wishes of the local people.
	Those local people want housing. They want to see their villages grow to accommodate people who were born and brought up in the area, but, oh no, they are not allowed that. We must stop the centralised planning system that dumps huge scale housing in certain areas that does not get built, does not allow small scale development in small villages, which is desperately needed, and allows the mass desecration of exceptional countrysideI am sorry that Government Members laughed when I spoke about the wind farmin a way that I do not believe the Government ever intended. I believe that their intentions were good when they considered ways of encouraging renewable energy, which, as I said, I support, but in this instance it is wholly and utterly wrong.
	If we are to address the needs of people who live in the countryside, who want to live in their communities, and who have different needs according to their ages, we must have a far more intelligent approach to planning and to the way we build houses. I regret that of all the speeches that I heard from the Labour Benches, not one Member said that the 12 billion that was spent on a VAT cut should have been spent on housing. I listened to the hon. Member for Ealing, Acton and Shepherd's Bush (Mr. Slaughter) talking about Hammersmith and FulhamI did not intervene on him because I did not want him to last any longer. He used to run that council, which kicked him out so severely that it is not surprising that his speech contained so many sour grapes. On an issue as important as planning, we must get it right for people who live in the countryside.

Bob Russell: I understand that the hon. Member for Welwyn Hatfield (Grant Shapps) is visiting my constituency tomorrow. He will be welcome in the beautiful town of Colchester. I am delighted that he is coming to Essex. On an Opposition day, not one of the 13 Conservative Members representing Essex constituencies has bothered to turn up for a very important housing debate.
	I rely on the hon. Gentleman to put that right. He will find an inspirational Liberal Democrat-led local authority whose housing policies in a very difficult time have won awards for their ways of trying to deal with the housing crisis and homelessness. I understand that the hon. Gentleman is going to the night shelter where those who are in desperate straits are accommodated, and he will find a town where we have the mayor's project, the YMCA foyer, a women's refuge and so on. What we do not have, unfortunately, is a house building programme such as we had 25 or 30 years ago.
	It is important that we look back in order to learn the lessons so that we can go forward. It is to the credit of successive Labour and Conservative Governments in the middle 50 years of the 20th century, bypassing the war, that there was mass house building of family houses which meant that by 1980 there was no such thing as homeless people in my town. Families could be guaranteed a family home within six months of going on the waiting list. It is not good enough for the Government to try to blame the previous Government for the shortage of housing. If one looks back, one finds that the record shows that Conservative Governments built more council houses in towns, cities and villages than Labour Governments over that period.
	There was a time when there was municipal prideboth Labour and Conservativein providing housing for those in need. It might come as a bit of a surprise to the Minister to hear that one of the reasons I was driven out of the Labour party in 1981 was that I did not object to the principle of the sale of council houses, although I objected to the way it was rolled out with huge discounts. I find it quite astonishing that I was driven out of the Labour party because of my stance in support of those who wished to buy their home, only to find new Labour further to the right than the Conservative party of 30 years ago. I do not have any desire to return to Labourcertainly not as it is today.
	Short of failing to defend the realm, the biggest sin of any Government is to fail to house their people. In my constituency, the number of names on the housing register is nudging 4,000, and more people are involved than those who are named. I am sure that in my constituency and in others there are empty dwellings. I want to see the Government and Opposition parties of the day trying to reach consensus on how we could look at the housing stock in its broadest sense and maximise its use. The Under-Secretary of State for Communities and Local Government, the hon. Member for Hartlepool (Mr. Wright), will have heard my intervention on the Minister for Housing. In my constituency the Government are responsible for more than 200 dwellings, and are paying rent on them, yet they are standing empty. That cannot be right. I am sure that there are other examples of empty dwellings around the country, some publicly owned but predominantly, I suspect, privately owned.
	If the Government can fund an arguably illegal war in Iraq and can bail out the bankers, why can they not fund the housing sector, as suggested by the right hon. Member for North-West Hampshire (Sir George Young), so that housing can come through the system? Not only would that provide work for unemployed building workers and the supply industryincluding those involved in fitting the property out with carpeting, furniture and so onbut, above all, it would provide decent family accommodation for hard-working families and their children. The Government have failed the children miserably when it comes to providing housing. If the children are not housed, a whole generation of dispossessed people is created.
	The right hon. Member for Greenwich and Woolwich (Mr. Raynsford) mentioned the new quango. My constituencyI cannot believe it is the only onehas about 100 acres of land zoned for housing, but nothing is happening. Why can the left hand of government and the right hand of government not come together, release that land and get unemployed building workers to build the houses to house those who are homeless? It strikes me that that is what government should be doing: government should be about considering the broader picture and it should be joined up. Housing should be provided for the Government's people.
	The Government have failed, but that is no surprise. I challenged the former Prime Minister at Prime Minister's Question Time, the former Deputy Prime Minister when he was responsible for housing, and the Prime Minister on this point. I have been banging on about it for about 12 years. We can blame the last Conservative Government for their failures, but the Thatcher Government built considerably more council houses than this pathetic Government have done in 12 years.
	Those are the facts and the numbers, but we can have the emotion, too. We are all housed. If we are running our advice bureaux and surgeries properly, we all know from the people who come through our front door, seeking our help, that there is a shortage of housing. If a post-war Labour Governmenta real Labour Governmentcould build housing for homeless people in need in the aftermath of war, why, after 12 years of new Labour, do we have a housing crisis that is the worst we have had in 100 years?

Justine Greening: Today's debate has been interesting and important. The consequences of the problem of housing waiting lists reach far beyond the lists themselves; the reality is that there is all too often a human and negative impact on a whole range of affected families and communities. I am thinking of problems of education and health inequality, family problems and even crime. We all see such issues in our constituencies; every single week as a London MP, I see constituents in my surgery who face them. We know that, more often than not, a housing issue is at the heart of many of the social problems on our streets and in our homes.
	Housing troubles are not the sole cause of society's problems, of course. However, we need to consider the impact on us as a nation of the increased waiting lists that we have seen, certainly in the past 10 to 12 years. Some 1.8 million people are now waiting for social housing in Britain, and they are desperate to get a home. As we have heard today, a growing number of people are homelessthey do not have a home at all. Yet Government statistics are changed and goalposts are moved to make the situation look better than it is. The situation is dire. We all recognise that we cannot fix the problems overnight, but many in the House are concerned that the Government have gone backwards; they certainly have not fixed the problems in the 12 years they have been in power.
	There have been a number of passionate and interesting contributions from Members across the House. The hon. Member for Sheffield, Attercliffe (Mr. Betts), who is no longer in his seat, is a member of the Communities and Local Government Committee. He talked of his experience in Sheffield and the need for more flexibility in the management of housing stock as well as the need for more social housing. He was followed by my hon. Friend the Member for St. Albans (Anne Main), also a member of the Select Committee She talked, perhaps more honestly, about the Committee's concerns and what she called the damning indictment in its recent report. She expressed her own view, saying that we need to consider very grass-roots issues, including the capability of planning officers up and down the country. We need to make sure that they can get through the developments that communities want.
	The right hon. Member for Greenwich and Woolwich (Mr. Raynsford) said that the debate should not come down to numbers, but there is no doubt that the numbers tell the story. As the hon. Member for Colchester (Bob Russell) just said, it has been this Government who have dropped the ball on social housing and who, year after year, have created less social housing than the previous Conservative Government did. If social housing had been created at the same rate, nearly 250,000 more social houses would have been built under the Labour Government. That fact is hard to deny. There is a desperate need for housing, but at the same time, as we have heard, there are plans to demolish 400,000 homes in the north of England. That suggests that the Government have no practical housing strategy that will make a difference to the very people who most need one.
	One of this afternoon's finest speeches was made by my right hon. Friend the Member for North-West Hampshire (Sir George Young), and it followed an unfortunately vitriolic speech from the hon. Member for Ealing, Acton and Shepherd's Bush (Mr. Slaughter). My right hon. Friend put forward a more reasoned view about the right to buy. As he pointed out, that gave millions of people the chance to buy a home and fulfil the dream of home ownership; without the right to buy, they could never have done that.
	Under this Government, the right to buy has been consistently reduced and trimmed back, so that current sales on that basis fell to just 15,000 in 2007-08. Many Government Members criticised the right to buy, yet their own Government have not got rid of it. Nevertheless, they seem to want it to wither on the vine. That is unfortunate, because a report by the then Office of the Deputy Prime Minister, just a few years ago, stated that the right to buy was one of the most successful housing policies because it enabled many households to become owner-occupiers who would otherwise not have been able to do so. The Government's own reports say that it was a successful policy, yet they are not maintaining it. Of course, they have brought forward other schemes such as social homebuy and shared ownerships, but those are all falling well short of the 120,000 sales target that the Government set themselves. So we have a restriction of the right to buy and a restriction in the operation of alternatives whereby people could start to share in the ownership of their home and see a route to owning their own home. Overall, it is a failing policy.
	Let us not forget that many people face severe overcrowding in their homes. In London, 98,000 families are living in overcrowded properties, and it is often children who are at the sharp end of that. They must find it like trying to study for their GCSEs on the tube in terms of the amount of privacy and peace that they get. That is the sharp end of this Government's failure to invest in and to create social housing at the levels of the previous Government.
	We have also talked about homelessness. Perhaps the people who have suffered most of all are those who do not have a home. We do not even know the exact numbers, but charities such as Crisis estimate that the total number of hidden homeless people may be up to 400,000.

Andrew Slaughter: I will try not to be horrid to the hon. Lady, but what would she say to local authorities who regularly send back millions of pounds of unwanted social housing grant to the Housing Corporation, as it wasthe Homes and Communities Agency, as it is nowbecause they do not wish to build the very houses that she is saying should be built?

Justine Greening: I am interested by the hon. Gentleman's comment. In his time on Hammersmith and Fulham council, to which he is referring, the waiting lists went up. He should ask his question not of me but of his own Ministers. Given the concerns about housing that most Government Members expressed, one would have thought that they were in opposition, yet it is their own Government who have, for more than a decade, presided over a decline in social housing the like of which we have not seen for 30 to 40 years. If we had had over the past 12 years the same level of social home building that we saw under the last Conservative Government, there would be 250,000 more social housing units for people to live in..
	What today's debate has shown, if nothing else, is that ultimately everybody starts from somewhere. Everybody in this country looks to the future and to what they can achieve not only for themselves but for their children, and they want something better. As an individual, as a community, as a country, we all aim for better lives for ourselves and our children, and often at the heart of this hope for the future is an aspiration to own one's own home. For many families, that is the building block of their family life, but it is a building block that this Government appear not to value. That is demonstrated by what we have heard today about the decline in social house building over the past 12 years.
	Owning one's home is perhaps not a right, but it should certainly be a choice. Unfortunately, over the past decade, under this Government, it has become a choice that has been increasingly denied to more and more people. Labour MPs ought to be asking their own Ministers why they have failed. What we need to kick-start the housing market is a general election. That would be the best way to start dealing with some of the challenges that we all see in our surgeries, to get our housing market back on track, to get social house building back on track and to get waiting lists back down.

Iain Wright: I start by welcoming the hon. Member for Putney (Justine Greening) to her Front-Bench team and the Communities and Local Government brief. It is the first time that we have debated, and I wish her well. I disagreed with about 98 per cent. of what she said [ Interruption. ] I will say what the 2 per cent. remaining is shortly. I agree with her that this has been an important debate, as befits the significance of housing. I also agree with her that it is difficult to think of a single other topic that incorporates feelings of safety, security and well-being, community cohesion, health chances, life expectancy, economic prosperity and environmental concerns, but housing does precisely that. That is why the debate has been important and invaluable.
	We have heard about the Belgrano, Iraq and Disraeli, and when I woke up this morning, I did not think that we would be debating those subjects. I did think that we would be debating shallow, superficial arguments from the Opposition, which is what we have heard today. My right hon. Friend the Minister for Housing analysed the argument of the hon. Member for Welwyn Hatfield (Grant Shapps) and systematically and methodically demolished it. She effectively exposed the holes in his argument, as well as the holes that were in the roofs of council houses when we took power.
	The hon. Gentleman was quite astonishing. He was so vague about what a future Conservative Administration would do, and on what incentives meant, as to be virtually incoherent. My hon. Friend the Member for Sheffield, Attercliffe (Mr. Betts) had him on the ropes after a challenging intervention, and the hon. Gentleman simply could not respond. I ask him again: what does he mean by incentives? Will they be financial incentives? Will he match the unprecedented 8.4 billion that was provided by the Government for the supply and provision of affordable housing over the comprehensive spending review period of 2008 to 2011? What does he think of the 510 million that we have provided for the housing, planning and delivery grant? In a previous debate, he saw that as a bribe; I see it as an incentive. I do not understand where he is coming from on that.
	The hon. Gentleman says that local authorities should be doing more, but he provided no alternative answers. More than that, however, what really struck me about his comments and those of the hon. Lady was the sheer gallthe breathtaking audacity of their comments. When in power, their party presided over a housing policy that was characterised by neglect, disrepair and underinvestment. The legacy left by the Conservative Administration was downright disgraceful. My hon. Friend brought to the debate his considerable expertise and knowledge as chair of Sheffield council's housing committee in the 1980s. He rightly mentioned the negative nature of our inheritance in 1997, and the sheer scale of what we had to do.
	The hon. Lady said that we all start from somewherea very profound statementbut where we started from in 1997 was appalling disrepair and underinvestment. Quite rightly, the Labour Government had to address and put right the enormous repairs and maintenance backlog that we saw after 18 years of Tory Government.

Bob Russell: rose

Iain Wright: It was absolutely disgraceful, and I hope that the hon. Gentleman will agree with me.

Bob Russell: The Minister quite rightly pointed out the appalling legacy of the previous Conservative Government. However, will he acknowledge that that awful Conservative Government built more council houses than new Labour has in 12 years?

Iain Wright: Actually, that brings me to a point that I wanted to make in response to my right hon. Friend the Member for Greenwich and Woolwich (Mr. Raynsford) about the fixation on numbers, whether in the case of waiting lists or otherwise. I pay tribute to my right hon. Friend for the enormous contribution that he made to the decent homes standard, which gave us the ability to take a whole generation of poorly housed council tenants out of poverty and substandard housing. Some of the dwellings that were built after 1979 were, frankly, of a shocking quality. They were absolutely disgraceful and unfit for human habitation. We had to deal with the poor quality of fittings such as bathrooms and kitchens and the poor building quality of dwellings, as the 1996 English house condition survey showed vividly. We had to repair what the Tories failed to repair and put right what they had done. There had been a decade or more of neglect and underinvestment, and they should be thoroughly ashamed.

Grant Shapps: rose

Iain Wright: In a week when people are apologising, I certainly give way to allow the hon. Gentleman to apologise. He is embarrassed about his party's record on housing, and I hope that he will take the opportunity to apologise.

Grant Shapps: I imagine that the Minister might be the one apologisingto the Prime Minister, for what he has just said about targets. Can he confirm that 3 million homes by 2020 is no longer a Government target?

Iain Wright: This is an important point. There has been a gross imbalance between the demand for and supply of housing. Kate Barker said in her review that 223,000 new households were formed each year. The target of 3 million homes by 2020 is backed by empirical evidence. It is not a figure that has been plucked from the air but as the result of long-term social demographics. People are living longer, thanks to the recovery of the NHS under this Government. More people are living on their own and need to be housed. I suggest that rather than be fixated on the figures, we should consider the underlying causes. I shall come later to rough sleeping, in which I know the hon. Gentleman has a particular interest.

Robert Key: rose

Iain Wright: I will give way, but I am conscious of time and have a lot of points to cover. Given that the hon. Gentleman was not here for the rest of the debate, I hope that he will be very brief.

Robert Key: I am grateful to the Minister. He knows that I am very fond of him and of Hartlepool, and that when I was a Minister, we spent a great deal of money on Hartlepool. One problem that we had when I was a Housing Minister was that the councils in the north-east of England, which were all run by Labour, did not know who were the tenants in a quarter of their council houses. People could go to Nigeria and buy the key to a council flat in the north-east.

Iain Wright: I expected better of a distinguished Member. The fact remains that, as my right hon. Friend the Minister for Housing said, we inherited a backlog of repairs and maintenance estimated at 19 billion. Half a million more dwellings were classed as unfit between 1991 and 1996a symptom of neglect, decay and a lack of care. Britain became the object of shame throughout the world as the number of people living on the streets and in doorways in the capital and elsewhere rose by thousands. As the hon. Lady said, we all have to start somewhere, and that was where we started. That was our inheritance, and we had to deal with it.
	The Government have invested more than 29 billion since 1997, having taken a definite and correct decision to rebuild the fabric of our appallingly maintained housing stock, with a target of bringing all social housing up to a decent standard. More than 40 billion will have been invested by the end of 2010. I pay tribute to my right hon. Friend the Member for Greenwich and Woolwich and others who have participated in that process.
	My hon. Friend the Member for Ealing, Acton and Shepherd's Bush (Mr. Slaughter) made what I thought was a measured speech. He is a real champion of affordable housing, and he made an important point about the rigour of housing waiting lists, saying that we should not be fixated on them. There is undoubtedly a housing problem that we need to do something about, and this Government are investing substantial and unprecedented resources to do that. However, I could go on to a housing waiting list in Hammersmith and Fulham and one in Hartlepool, so there can be an element of duplication. My hon. Friend rightly said that we needed to focus on temporary accommodation and homelessness acceptances to tackle urgent need. We have achieved genuine success with that.
	The number of households in temporary accommodation stabilised in September 2004 and has been reducing since the fourth quarter of 2005. Current statistics show a reduction of 13 per cent. in September 2008 compared with the same date the previous year, and figures have fallen below 75,000 for the first time.
	Homelessness acceptances have reduced steadily since late 2003, following the effective homelessness prevention work that housing authorities and their delivery partners have undertaken. That is a key point. The hon. Member for Welwyn Hatfield was kind enough to mention the rough sleeping strategy that I launched in November. It has three Ps. First, we need partnership working working together to ensure that we do something to end the scandal of rough sleeping. Secondly, we need preventionwe must put resources up front so that we do not have to deal reactively with rough sleeping. Thirdly, we need personalised serviceswe must tailor services to the needs of the individual rather than having a blanket, one-size-fits-all system.
	I know that the hon. Gentleman is worried about rough sleeper counts, which he has mentioned on several occasions. I hope that he will join me in celebrating the enormous success of the rough sleeping strategy in the past 10 years. We have never professed that rough sleeper counts provided a bed for everyone who sleeps rough on a specific night. However, they provide a snapshot, and I am keen to make it clear in the new rough sleeping strategy that annual figures are not estimates of all those who sleep rough in the country. I want to focus resources on the street need audit because I want the rough sleeper count to be perceived as the beginning, not the end of the process, and not only to offer an opportunity to identify need, but, more important, to act as a call to arms.
	The hon. Member for Brent, East (Sarah Teather) made a witty and perceptive speech. She mentioned the slashing of the Housing Corporation's budget and the catalogue of disrepair under the previous Administration. She is right about both points. I agree with much of what she said, but I temper that by saying that I would like more consistency from her party. Her warm words in the Chamber were welcome, and we should celebrate them. However, as my hon. Friend the Member for Sheffield, Attercliffe said, when Liberal Democrats run things, it is a different story. Durham city is ably represented here by my hon. Friend the Member for City of Durham (Dr. Blackman-Woods), but the Liberal Democrats there were shambolic. Good, honest people were let down by Liberal Democrat councils in the City of Durham and elsewhere. I should therefore like more consistency from the Liberal Democrats.
	The hon. Member for Colchester (Bob Russell) made an entertaining contribution, in which he mentioned the role of councilsa theme that has run throughout this afternoon's debate. Local authorities have always had a key role in assessing the housing needs of their area. We want to increase that so that, as well as playing an important strategic role, they have a direct delivery role. The Prime Minister has been firm about the matter. We want to remove some of the disincentives that have been established in the past 30 years so that we can provide a direct delivery role. I therefore hope that hon. Members from all parties will work with us to achieve that. The consultation paper about allowing councils to build was issued on 21 January and I urge hon. Members to look at it.
	The key theme of the debate is the alternatives that the Opposition propose. I have waited throughout our discussion for a credible alternative from Conservative Members. The hon. Lady and my hon. Friends suggested alternatives. I wanted to hear from the Conservative party a substantial policy that moved away from party political point scoring and towards addressing the concerns of the people of this country. How will Conservative Members deal with the housing waiting lists? How will they tackle the long-standing imbalance between supply and demand for housing? How will they stimulate the construction industry and help the economy by building the homes we desperately need? How will they address the worldwide lack of credit and subsequent drying up of mortgages? How will they improve the quality and design of the housing stock? How will they make the housing stock greener by ensuring that existing homes are made energy efficient and that new homes minimise damage to the environment?
	We had it confirmed in today's debate that the Tories' housing policy is this and this alone: they will provide incentives. What an astounding abdication of responsible opposition. What planet are they on? Who do they purport to represent? It is certainly not the decent and hard-working young families of this country who are concerned about housing and who want high-quality, affordable and well-designed homes and communities in which to bring up their children.
	The Opposition seem removed from the concerns of real life. The Conservatives have no credible alternative and they will do nothing. In contrast, we are providing unprecedented sums of investment and we are working night and day to address the concerns of families in these difficult times. We will continue to provide real help now

Patrick McLoughlin: claimed to move the closure (Standing Order No. 36).
	 Question put forthwith, That the Question be now put.
	 Question agreed to

Question put accordingly (Standing Order No. 31(2)), That the original words stand part of the Question.
	 The House divided: Ayes 229, Noes 311.

Question accordingly negatived.
	 Question put forthwith (Standing Order No. 31(2)), That the proposed words be there added.
	 Question agreed to.
	 The Deputy Speaker declared the main Question, as amended, to be agreed to (Standing Order No. 31(2)).
	 Resolved,
	That this House notes that the Government is investing over 8 billion between 2008 and 2011 to increase the supply of social and affordable housing, has invested over 29 billion since 1997 to bring social housing up to a decent standard and has made 205 million available for a mortgage rescue scheme to support the most vulnerable home owners facing repossession so they can remain in their home; further notes that there has been a 74 per cent. reduction in rough sleeping since 1998, that the long term use of bed and breakfast accommodation as temporary accommodation for families provided under the homelessness legislation has ended and that since 2003 the number of people who have been accepted as owed a main duty under the homelessness legislation has reduced by 60 per cent.; further notes that the Government has helped more than 110,000 households into low cost home ownership since 2001; believes that the introduction of enhanced housing options services provides tailored housing advice reflecting a household's individual circumstances while choice-based lettings schemes give social housing applicants greater choice over where they want to live; and further believes that the Government has taken measures to make best use of the social housing stock such as tackling overcrowding and under-occupation.

Peter Kilfoyle: On a point of order, Madam Deputy Speaker. Can you tell the House whether you have received representations from the Leader of the Opposition, wishing to correct the comments that he made about Titian? Or is it enough, in this modern technological age, for his staff simply to alter Wikipedia?

Madam Deputy Speaker: The right hon. Gentleman, who is an experienced Member of the House, knows that that is not a point of order for the Chair; but his comments are on the record.  [Interruption.] Order. Will Members who are not staying for the next debate please leave the Chamber as quickly and quietly as possible?

Royal Mail

Kenneth Clarke: I beg to move,
	That this House welcomes the Hooper review of UK postal services; and urges the Government to implement rapidly the review's proposals for the partial privatisation of Royal Mail.
	I regret that I am not the spokesman for my party on the subject of Titian or any other great Venetian painter. I am, however, addressing a serious issue, and presenting what I hope the whole House will consider to be a helpful motion. I am aware that over the years I have acquired a slightly clichd reputation as a rather combative politician, and I sometimes weary of being described as a bruiser, so I decided to table a constructive and helpful motion as the first Opposition motion on the subject of a DBERR responsibility.
	Lord MandelsonPeter Mandelsonhas rightly described himself as an old political friend of mine. I thought I would table a motion that agreed with an important statement that he had made in December last year, supported his announcement about the future of Royal Mail and urged him to proceed with that policy. My hon. Friends and I will have to ask some very important questionsin two months the Government have failed to clarify aspects of the policy, so there will be serious issues for me to raisebut I had assumed that the motion, as drafted, would stand alone on the Order Paper.

Rob Marris: Will the right hon. and learned Gentleman give way?

Kenneth Clarke: I will in just a second. First, let me explain the slight puzzlement that I am currently experiencing.
	If one tables a motion that appears to be supportive of what a Government spokesman said on a subject only two months ago, one rather expects the Government to join Opposition Members in any Division that is called; we might expect to see whether there are Members who have failed to be persuaded by Lord Mandelson and who wish to hold out against this wide consensus, and perhaps expect an informative debate, particularly for those interested in the serious subject of Royal Mail, to then take placebut no. On the Order Paper has appeared a long, convoluted and almost impenetrable amendment, which someone has decided to table to correct our simple support for Lord Mandelson, and it actually arouses more mysteries than it solves.
	So there will be other questions. Will the Government explain whether they are sticking to their policy? What do they mean in seeking to qualify an endorsement of what the Cabinet Minister with responsibility for Royal Mail was committing the Government to two months ago, as was the Minister for Employment Relations and Postal Affairs, who repeated the same statement and agreed to the policy?

Rob Marris: The problem with the right hon. and learned Gentleman's motion is the adverb.

Kenneth Clarke: I have never seen a longer amendment to remove an adverb in all my life. I think that those who drafted the Government amendment had more on their minds than an adverb.

Peter Kilfoyle: Will the right hon. and learned Gentleman give way?

Kenneth Clarke: I will give way shortly, but I do not want to be drawn on to Titian now. Let me make a little more progress first, as we must get on to the serious substance of the debate.
	When Lord Mandelson made his statement on the Hooper report on 16 December, which was repeated by the Minister now present, he could not have been clearer about what the policy would be. He accepted the three main recommendations of the extremely good Hooper report. There were questions on pensions, regulation and, most importantly, part-privatisation. He and the Minister were clearthere was clarity in both Housesthat they were committed to bringing in a partner through a minority stake in Royal Mail. They made it clear that that would not apply to the post office network, so Post Office Ltd would have to be separated out, as it was Royal Mail that was having private sector capital and a private sector partner introduced. We have reflected on that and waited for the details, but as our motion shows, we are prepared to agree that that needs to be proceeded with with some urgency.
	I realise that there were some difficulties at the time; not everybody agreed with what the Ministers said then. Indeed, the Minister for Employment Relations and Postal Affairs suffered a considerable misfortune, because on the following day, 17 December, his trusted parliamentary aidehis own Parliamentary Private Secretary, the hon. Member for Dundee, West (Mr. McGovern)resigned. He left the Government, sayingI am relying on the BBC online site
	I do not support what looks to me like partial privatisation of the Royal Mail.
	I do not blame the hon. Gentleman for saying that it looked like partial privatisation of Royal Mail, because what had been announced was partial privatisation of Royal Mail. I thought that that was what we were going to debate, but I shall now have to wait and see what we are going to debate.

Peter Kilfoyle: rose

Kenneth Clarke: I shall give way once more, and then I will turn to the substance, which I hope will enable us to unravel this mystery, because it is indeed a mystery, of the Government's current policy.

Peter Kilfoyle: I am grateful to the right hon. and learned Gentleman, and I do not want to paint him into a corner, but the only artist he is in danger of becoming is a political con artist, and let me say this to him in all sincerity[Hon. Members: Withdraw!]

Madam Deputy Speaker: Order. Please will the hon. Gentleman withdraw that remark?

Peter Kilfoyle: I certainly withdraw the remark; I am sure the right hon. and learned Gentleman understands what I am driving at. In his comments so far, he has already made it clear that his strategy is to drive a wedge between Lord Mandelson and the rest of the Government.  [Interruption.] Does he accept [Interruption.] Will he not accept [Interruption.]

Madam Deputy Speaker: Order. The House must come to order.

Peter Kilfoyle: Does the right hon. and learned Gentleman accept that there is a difference between the Conservative and Labour Members: we are concerned about those with a real interest in the Post OfficePost Office users and staffwhereas the Conservatives want to score cheap political points?

Kenneth Clarke: I share all the concern about the Post OfficeI use it and realise that it is in an important institutionbut to say that the Conservatives are the con artists in all this, which is out of order, is ridiculous. Our position could not be one of greater clarity. What is mystifyingwhat justifies the description that the hon. Gentleman usesis the complete obscurity of the Government's position, given what they have gone through.
	It is important that we know where we stand, given where we have come from. I was the Minister with responsibility for the Post Office about 20 years agoI have done the job that the Minister for Employment Relations and Postal Affairs, who is sitting opposite me, is doingand I faced all the same problems of how to ensure that Royal Mail became a modern service organisation that could have a very strong future and could modernise in line with what was being done in other countries and so on.
	At that time, I went to the then Prime Minister, Margaret Thatcher, to try to persuade her that we needed to introduce some private capital and private expertise as part of the programme that we were carrying forward in many of the public services. For reasons of which I am still unaware, I and many others were not able to persuade Margaret Thatcher to proceed with the partial or full privatisation of Royal Mail. I do not want to go too much into the history, but it was widely publicised that Michael Heseltine and I made efforts to persuade the Major Government to introduce private capital into Royal MailI am afraid to say that I argued to my colleagues that it would not last 10 years if we did not go down that pathbut, again, I was unsuccessful.
	The Conservatives' approach has been consistent and clear. In 1998, when Lord Mandelson was last Secretary of State for Trade and Industry, he put forward some proposals and my right hon. Friend the Member for Wokingham (Mr. Redwood), who was then speaking on behalf of my party, suggested that private capital should be introduced into the business. We offered to support the Government if they wanted to do that, but they were vehement in their rejections. Lord Mandelson was dismissive of our proposal, saying that it
	should be stamped 'return to sender'.[ Official Report, 7 December 1998; Vol. 322, c. 26.]
	As recently as 2006, the current Secretary of State for Health, who was then Business Secretary, said that he would give an absolute, unequivocal commitment that a stake in Royal Mail would not be sold to the private sector.
	The Conservatives have been clear in their approach, I have certainly been clear and consistent and the Labour party has been pretty clear about things so far. I congratulate Lord Mandelson on his courage and his success. Who would have thought that after all those years the labour movement would be introducing this proposal, with Lord Mandelson, echoed by his Minister for Employment Relations and Postal Affairs, commending it in this House. I welcome and support that.

Several hon. Members: rose

Kenneth Clarke: I shall give way when I finish this passage.
	This proposal is a U-turn. I do not criticise the Labour party for making a U-turn, because all Ministers have had to make U-turns. They should be made clearly and explained, and they should be done with a straightforwardness and elegance. Is that what was done on 16 December? I congratulate the Secretary of State on tearing up his election manifesto commitment, which had been so foolishly given, and on being so explicitbut what has happened now? The Government's amendment is not a U-turnit is an obscure wriggle; I have never seen meaning vanish into a burrow before. It is plainly drafted by a committee, probably chaired by a nominee of the Chief Whip. If it were parliamentary for me to use the term con artist about anybody in this Chamber, the authors of this amendment would be strong contenders for it.
	I shall move on to the substance. I anticipated that I would be pressing the Minister to go through the substance of what has been proposed and what interest has been expressedTNT was said to be very interested. When the stake is sold, will the proceeds go to Royal Mail? In addition, there are the very difficult questions about the pensions and the regulator. However, the Minister now has more questions to answer than simply on the policy, because the Hooper reportwhich we all find very convincingcompellingly sets out why the status quo is not an option and change is necessary; that more private capital would be welcome; and that some managerial experience of change in this kind of industry needs to be introduced urgently.

Peter Hain: This is good, knockabout, Oxbridge stuff [ Interruption. ] That is why all the Oxbridge types behind the right hon. and learned Gentleman are cheering him. But if he welcomes the Hooper report, why does he not support the Government's efforts to address the pension deficit? The Tories would leave Post Office pensioners in the lurch by pursuing their obsession with privatisation, as they always have.

Kenneth Clarke: We have been trying to get the Government to say what they will do about the pension deficit. I trust that we will receive some enlightenment today.
	I shall put the issue in context. I have already said that there is widespread consensus about Royal Mail. For example, there is widespread consensus that any proposals for its future should be based on the universal service obligation, which Royal Mail should accept, whatever its form. It is necessary to have a nationwide service, with deliveries to any citizen or household at a uniform price; Royal Mail must continue to discharge that obligation. Indeed, the Hooper report says that the changes that it recommends are above all necessary to ensure that the universal service obligation can be continued.

Robert Smith: The right hon. and learned Gentleman makes an important point about protecting the universal service obligation for the sake of all our constituents. Is there not a lesson to be learned from the fact that, yet again, the UK introduced competition into postal services faster and deeper than did countries in mainland Europe, meaning that rival companies have a protected home market and are able to cherry-pick in our market? Would it not be more sensible to have a levy on competition to protect the universal service and ensure a level playing field in this country?

Kenneth Clarke: There should certainly be a level playing field, and the consumer benefits from such competition. It will be extended across Europe and I hope that Royal Mail will be a powerful contender in wider markets, if it can be modernised and reach the standards of efficiency of its competitors. The Government introduced that competition. We agree that it is of lasting benefit to business and the ordinary user of the service in this country, but competition is not responsible for the present difficulties.
	Royal Mail's long-standing difficulties are being compounded by the change in the medium of communication. Far more revenue has been lostthe threat to the taxpayer from Royal Mail's current state is considerablefrom the introduction of new technology and the steady loss of traffic than has been lost to competition. Hooper is right that the loss of volumethe amount of letters and parcels to be deliveredis speeding up. It could be 7 to 10 per cent. next year without any difficulty, and that is leading Royal Mail in an ever-more downward direction. Other problems include the fact that it has not adopted the modern technology of its competitors in Europe, the enormous pension deficit hanging around its neck like a millstone and the lack of change over the past few years. As Hooper rightly said, it also suffers from extremely bad industrial relations. As we all remember, there was a most unfortunate strike in 2007, which weakened the business still further. Many small and medium-sized businesses joined their bigger competitors in deciding that they could not longer trust Royal Mail, and they turned away from it.
	I have merely summarised the analysis set out in Hooper. I have not left myself time to repeat it, but it has been accepted completely by the Government and I think that it is unanswerable. The status quo is not tenable in any way at all.
	These problems are familiar to anyone who has ever followed Royal Mail. Similar discussions have gone on for a very long time, and I am sad to say that Hooper's analysis and the litany of problems that he sets out remind me of when I was the Minister in charge. That was a very long time ago, but the problems have actually got worse and worse in the past 10 or 12 years.
	Lord Mandelson's clarion call to action before Christmas came after 12 years of inaction or pointless action, and when one looks at the state of the business one realises that it is getting nowhere fast. In 2001, the Government gave Post Office Ltd commercial freedom, but none of the reforms that have been tried has worked. Over and over again, the Hooper commission refers to the political background that has inhibited the management's ability to take decisions. It is obvious that a succession of Ministersuntil these men of courage came alonghave been intervening, slowing down the management and giving in to pressure in trying to make sure that the changes do not take place.
	I believe that the time has come for a genuine consensus about action. Does the Government amendment mean that, after two months of failing to produce any detail, they are now buckling at the knee and deciding to leave the matter for a bit? If they are going back to the 12 years of pretty useless inactivity that has been their policy so far, the message of the Hooper report is that the Royal Mail may not survive, as it says that the universal service obligation depends on the changes that it recommends.
	I hope that the Minister will correct my misunderstanding and that he will make it clear that partial privatisationnot even full privatisationis an option. That is quite a concession from someone who was in the Thatcher Government, but the Opposition are not pressing for anything other than a minority partner to enter into a mixed public-private sector partnership. I hope that the Minister will confirm that that is the Government's policy, and that progress is being made with it.
	I leave the Minister to make the case for private capital. Where else is the capital going to come from, given the state of the public finances, the needs of the Post Office and the circumstances of the next few years? Does anyone really believe that the Post Office will be able to compete successfully with health, education and defence for the capital that it requires? As Hooper argues compellingly, private sector competitors that are prepared to come in as partners in Royal Mail will be able to bring with them the experience of change and of management that will help the transition to go smoothly. They will be able to deal with the understandable fears of staff and stakeholders, and the understandable need to win back confidence in the business.

John Heppell: Will the right hon. and learned Gentleman give way?

Kenneth Clarke: I will not, as many hon. Members want to speak in the debate, and Back Benchers are under a time limit.
	The regulatory proposals make sense. It plainly makes sense to transfer the regulatory responsibilities for Royal Mail from Postcomm to Ofcom. The change goes with other things, as Hooper says, but it makes sense in any event, as the relationship between Postcomm and Royal Mail has been fairly unsatisfactory. In addition, it no longer makes sense to deal with Royal Mail apart from the other responsibilities that Ofcom has.
	The pension question is, as the right hon. Member for Neath (Mr. Hain) says, very important. The Government have allowed the pension deficit to become extremely severe by the standards of any commercial organisation in the country. The report does not clearly recommend anything; it leaves options. However, it does say that the Government should address the growing pensions deficit.

John Heppell: Will the right hon. and learned Gentleman give way on that point?

Kenneth Clarke: No, I am afraid that I do not have time to give way any more.
	The report says that the Government should address the pensions deficitand so they should. We are talking about 22 billion of assets and 29 billion of liabilities. The company as a company, and the business as a business, is balance-sheet insolvent, as Hooper rightly says. It will probably be quite impossible to get a private sector partner to take an equity stake, when the company has that around its neck. There are options, and the Minister for Employment Relations and Postal Affairs should by now be able to tell us what options will be pursued to deal with the problem.
	The real fear, which my hon. Friend the Member for Rutland and Melton (Alan Duncan) has previously expressed, is that the Treasuryor perhaps the Cabinet as a whole, having been induced to agree to the remarkable new policyhas taken the view that the simple solution is to have a look at the 22 billion of assets. It is very useful to have 22 billion of assets, which the Government can take care of by taking them into their coffers. The 29 billion of liabilities will therefore be added to that great stock of unfunded public sector pension liabilities that the future taxpayer already faces. Who knows what will be done to those liabilities? That option would be irresponsible and very short term.
	Alternatives are difficult. We faced those difficulties in the past with British Telecom and others. Given what is happening at the moment, more public money being spent in vast sums is unlikely, but there may be statutory guarantees in case the new entity goes bankrupt; British Telecom was placed on that footing when it was privatised. That idea is canvassed in the report, and it could be considered carefully by the Government. We need, and have today provided the opportunity for, the Government to address the pensions problem, now that two months have passed. We need them to tell us how they will face that problem, which, so long as it lasts, puts job security and service improvements in Royal Mail in tremendous doubt. It is a tremendous threat to today's taxpayers, future taxpayers or both. How do the Government propose to address what Royal Mail has piled up on its desk?
	I conclude by going back to the main question, although I did not think that it would be the main question. Of course, I dwelt on this point when I started my remarks, but there is a most remarkable outcome of the amendment that appeared on the Order Paper this morning. Instead of having a comparatively low-key debate, as I thought we would, in which we would ask questions and Ministers would give details and some indication of when the legislation would come forward and what form it would take, we find that we are trying to ask what on earth the policy is at all.  [Interruption.] Well, a note of indignation comes into my voice.
	The Government are merely proposing that the House vote for the suggestion that the Government should address the pensions problem. Of course the Government should address the pensions problem; we have been saying that for two months. Exactly how do they propose to address it? The Government amendment
	notes that modernisation in the Royal Mail is essential and that investment must be found for it.
	That does not sound as clear as Lord Mandelson was two months ago. I have never seen a more ridiculous statement of the obvious put on the Order Paper, but if the Government are inviting us to agree with the suggestion that investment must be found for the modernisation of Royal Mail, I suggest that they tell us what their proposals are for finding it, if they are abandoning the proposals that they had two months ago, when they had a private sector partner.
	The motion dregs everything up, including an attempt to compare the Government's investment record with the investment record of the Conservative Government some time ago; it is all our fault, apparently. That was more than 12 years ago. The motion is obviously written by a committee. It is obviously written with parliamentary process in mind. Indeed, the amendment winds up with the ringing reassurance that
	legislation on these issues will be subject to normal parliamentary procedures.
	I do not know which Labour rebel needed to be reassured that the Government would at least allow Parliament a debatea short, cursory one, no doubttouching on the subject, or why a motion had to be passed to indicate that normal parliamentary procedures would be used to scrutinise the measures.
	I can only say that this is an important debate, Royal Mail is an important service, the service is in crisis, and the Government have produced a report that says that the universal service obligation may well not survive unless they address it now. It is a serious motion. The Government had a clear policy that we would support if they went back to it. I hope the Minister will say that he will cling to it. I hope he does not obscure all questions, going through an elaborately orchestrated regime where he tries to reassure rebels on the Labour Benches that the Government are not going to do anything at all. That would not be in the national interest. In the light of the Government amendment, the future of Royal Mail is a more urgent and worrying question than it was even yesterday when we tabled the motion.

Several hon. Members: rose

Madam Deputy Speaker: Order. I apologise to the House that I omitted to inform it that Mr. Speaker has selected the amendment in the name of the Prime Minister. I was clearly distracted by the difficult point of order that I had to deal with.

Patrick McFadden: I beg to move an amendment, to leave out from House to the end of the Question and add:
	notes the threats to the future of the Royal Mail and welcomes the conclusion of the Hooper Report that, as part of a plan to place the Royal Mail on a sustainable path for the future, the current six days a week universal service obligation (USO) must be protected, that the primary duty of a new regulator should be to maintain the USO, and that the Government should address the growing pensions deficit; notes that modernisation in the Royal Mail is essential and that investment must be found for it; endorses the call for a new relationship between management and postal unions; urges engagement with relevant stakeholders to secure the Government's commitment to a thriving and prosperous Royal Mail, secure in public ownership, that is able to compete and lead internationally and that preserves the universal postal service; further notes the Conservatives' failure to invest in Royal Mail when they were in power in contrast with Labour's support for both Royal Mail and the Post Office; and notes that legislation on these issues will be subject to normal parliamentary procedures.
	We welcome the opportunity to debate the future of Royal Mail. I thank the right hon. and learned Member for Rushcliffe (Mr. Clarke) for his introduction to the debate. I confess that my research on his past career must have been less than complete. I had not realised that he had held the post of Minister with responsibility for postal affairs some years ago, so let me begin my thanking him warmly for the legacy that he bequeathed to us. His experience will have given him a familiarity with the issues. The difference between the time when he had responsibility for these matters and now is the technological revolution, which lies at the heart of many of the difficulties that the company faces.
	The right hon. and learned Gentleman is an experienced and very canny politician, but I do not think the motion tabled by his party is the most canny thing that he has done. If he is serious when he says that there is nothing in the Government amendment that he or his colleagues could disagree with, I warmly welcome him to join us in the Lobby tonight to vote for the Government amendment.
	For its 300-year history, Royal Mail has been able to rely with a considerable degree of certainty on mail volumes rising and falling in line with the country's gross domestic product. That was the case for many years, but in recent years that pattern has been overtaken by the technological revolution and the choices that citizens make every day about how they communicate with one another and how they do business: an e-mail sent is a letter not sent; a bill paid by direct debit is a letter not sent; family pictures posted on a photo-sharing website such as Flickr are pictures not sent through the post. All this has become clear and all of it has become worldwide.

Albert Owen: I am grateful to my right hon. Friend for giving way on that important point about new technology. Is he a little surprised, as I am, that the shadow Business Secretary seems not to have been to a sorting office since he was in charge? When I go, I see an increased volume of parcels. It is new technology such as eBay that is allowing that extra business. The Post Office, when given the opportunity, can deliver a good service.

Patrick McFadden: My hon. Friend is correct to say that there has been an increase in the volume of packets posted, but I have to tell him that the volume of mail sent overall has declined not just in this country but in many others. In just three years, the volume of mail posted in the UK has fallen by 5 million items per day. There has been an increase in the number of packets posted as a result of internet shopping and so on, but that increase is included in an overall drop of 5 million items a day. This effect is evident not only in the UK but in France, Germany, the Netherlands, Italy and many other countries.

Robert Goodwill: Does the Minister not agree that the downgrade in some of the service has contributed to the problem? Businesses in Scarborough that start work at 9 o'clock in the morning and used to find the mail on the doormat waiting to be processed now sometimes have to wait until 2 o'clock in the afternoon before the mail arrives.

Patrick McFadden: What I will say is that the maintenance of the universal service obligationthe six-day-a-week, one-price-goes-anywhere deliveryis extremely important. It is at the heart of the Hooper report and we are determined to preserve it.
	The US postal service has a monopoly on letters, and we have been urged by some critics of our proposals to examine it as an example of why the Government's proposals are not needed. It was recently reported to be heading for a loss of $6 billion after a fall in mail volumes last year of 4.5 per cent. That has led the company to ask Congress for permission to drop the Saturday delivery. Mr. John Potter, the US Postmaster General, said:
	it is clear that the problems we are facing are intensifying...No one knows at what point mail volume will bottom out.
	Unlike in the United States, dropping the Saturday service is not a route that we want to go down. For the first time, our USO is loss-making, but we believe it is valuable to the public and to the small businesses mentioned by the hon. Gentleman. We want to maintain it and to make the changes necessary to do so, rather than consigning our postal service to decline.

Jim Cunningham: Later in his speech, will my right hon. Friend clear up the press reports regarding redundanciesI think 16,000 was the figure mentioned? Alternatively, perhaps he can write to me when he has thought about that question.

Patrick McFadden: I believe that the company said that it had no such plans. Hooper considered the background of change that I have set out and made three interlinked recommendations. The first was that the Government should address the historic pension deficit in Royal Mail. The second was that there should be a strategic partnership between Royal Mail and another postal or network company. The third was that the regulatory system should be changed.

Michael Weir: I understand what the Minister is saying about the USO, and I agree with him, but the problem is that even the management of Royal Mail have made noises to the effect that they would like to change the USO. Indeed, they have tried to do so through zonal pricing, which was, thankfully, rejected. What guarantees do we have that, if Royal Mail is part privatised, the private company will not seek changes to the USO?

Patrick McFadden: We have enshrined the USO in primary legislation and we will continue to do so in the future.
	The falling volume of mail is not the only challenge facing the company. The pension deficit is another huge challenge. Three years ago, it was valued at 3.4 billion. The most recent estimate, in March 2008, was 5.9 billon. The next valuation is likely to be even worse.

John Grogan: My right hon. Friend mentions the strategic partnership. Does he find it as intriguing as I do that there is no mention of that strategic partnership in the Government amendment? Does that reflect the growing concern of Cabinet Members and in the Whips Office and No. 10 that the proposal should not be proceeded with, not least because it could raise the price of stamps and cut the level of service?

Patrick McFadden: Absolutely not.
	Without change, postal workers who serve us through thick and thin

Kenneth Clarke: Let me pick up on that last point. Is the Minister confirming that my alarm was unfounded and that the idea of getting a strategic partner who will buy a stake in the company remains firmly the Government's policy, even though he is not prepared to agree to our motion, which expresses support for it?

Patrick McFadden: I just said that Hooper gave three interlinked recommendations, one of which was a strategic partnership between Royal Mail and another postal or network company.

Geraldine Smith: If a strategic partner partly owns Royal Mail, is that not part-privatisation? Am I missing something?

Patrick McFadden: Royal Mail will remain a publicly owned company. We have made that clear and that is why we do not believe that the process can be characterised in the way set out by my hon. Friend.
	Let me continue talking about the pension fund. Let us not underestimate the problems that it creates for Royal Mail. It is one of the largest pension schemes in the country and the liabilities represent more than 75 times the company's profits, whereas the FTSE 100 average is two and a half times. Even other schemes with big deficits are dwarfed in comparison with Royal Mail's; the liabilities of the next largest schemes range in size from nine to 13 times profits. In cash terms, the company's total pension costs in the year to March 2008 were more than 800 million, of which 280 million was allocated for pension deficit recovery. That is before the next valuation process, which is due to begin next month. We want to face up to the problem, on which the Opposition motion is completely silent. That is another reason not to support it.

Graham Stuart: I congratulate the Minister on having the courage of his convictions in looking at the facts and seeing the need for change. However, will he share with the House what progress he is making with what some might call the dinosaur elements on his own Back Benches? We have heard today from various Labour Members, most of whom are members of the Communication Workers Union, and some of whom habitually fail to mention that when they stand up to speak.

Patrick McFadden: We all have an interest in this issue, and all right hon. and hon. Members' views on it are valid.
	Addressing the pension deficit is not an easy decision. If we do that for Royal Mail, taxpayers are entitled to ask what change they will get in return. How will taxpayers have confidence that Royal Mail can make the changes it needs to make to cope with falling mail volumes and new technology? That issue is critical. As the Hooper report rightly says, only one company can deliver the USO; only one company can send a postman or woman up every garden path in the country six days a week. The health of Royal Mail matters, and we have to take the decisions necessary to secure its future.

David Taylor: I am not sure whether my right hon. Friend was at the Labour party conference 20 weeks ago. It passed a policy supporting a wholly publicly owned Royal Mail, and that was strongly endorsed by my right hon. Friend the Member for Barrow and Furness (Mr. Hutton), who is not known for an aversion to dallying with the private sector. Does the Minister not accept that if a wholly publicly owned Royal Mail was a partly privatised organisation, that would be not only oxymoronic but like being a little bit pregnant?

Patrick McFadden: I shall come back to the analogy of being a little bit pregnant. That policy said that we had set out a vision of a wholly publicly owned Royal Mail; we have for years. If my hon. Friend reads on, he will see that it also said we had commissioned the Hooper report to look to the future. Hooper has now reported and made his recommendations.

Simon Hughes: Will the Minister give way?

Patrick McFadden: No, I must make some progress. Royal Mail has made some progress in recent years. Its performance in delivering first-class post by the following day has improved and some investment in new machinery has been made. However, it is still less automated than many comparable services. There is still a great deal to do, to secure not only automation but the delivery of new products. One example used in the Hooper report is walk sequencingthe last stage of post sorting before the delivery round. That is done by hand in the UK, while some competitors do 85 per cent. of that work by machine.
	Much has been made in recent weeks of the finance needed to make progress on the issue. I want to make two points about that. First, the 1.2 billion that the Government gave Royal Mail two years ago is a commercial loan, which must be repaid to the Government. Secondly, that form of finance is neither fast nor flexible. Even after lengthy negotiations between the company and the Government, two years on the European Commission is still deliberating about whether the financing is allowable under state aid provision. Royal Mail must not only complete, install and use the new machinery that it needs, but develop new products. The idea that the company's problems will be over if we lift the pensions deficit is wrong. The company needs ongoing capital and expertise to combine the use of mail with other technologies. We have seen too little of that in the UK. Partnership offers the opportunity not only to inject new capital into the business but to bring in expertise and the confidence to make the changes that the company has so far not made far enough or fast enough.

Bob Spink: I congratulate the Minister on finally getting away from the dogma and getting down pragmatically to how we can help Royal Mail and the Post Office. In fact, the Prime Minister's amendment says that the Labour Government want to help and support Royal Mail and the Post Office. Will he take that away for future consideration and try to find a way to enable the banks to make their current accounts available in post offices, which would be very supportive?

Patrick McFadden: I think the hon. Gentleman will find that millions of bank accounts are available to post offices. Perhaps people do not know enough about that. Many day-to-day banking services are available through post offices.

Peter Luff: rose

Patrick McFadden: I give way to the Chair of the Select Committee.

Peter Luff: Can the Minister confirm that of the 1.2 billion of investment that he mentioned, some 600 million remains unspent? I understand that that is not particularly surprising, because it was always intended to last longer than just one or two years, and some of it will be paid out only when the machinery is delivered. His hon. Friends have criticised the failure of management to spend that 600 million, but am I correct in believing that it is perfectly reasonable that it remains unspent?

Patrick McFadden: The critical point about the 1.2 billion that has been missed in recent weeks is that this is a commercial loan that has to be repaid, not a grant that is simply given by the Government to the company.
	Let me say a bit more about the issue of partnership. Hooper recommends a partnership with another postal or network company that has carried out the kind of change with which Royal Mail needs to go further and faster. The nub of this debate is what this means and why it is necessary. It does not mean privatisation of Royal Mail. A company is either publicly owned or not, and with this Government Royal Mail will remain publicly owned. Let me make it clear that that will be specified in the legislation to implement the Government's proposals. The Government will own the majority of the company and appoint the majority of the board, and it will still count as a publicly owned company. Royal Mail will not be privatised, and the partnership that we propose is not the first step towards privatisation. That is one reason why we will not be voting for the Opposition's motion.

David Hamilton: I am rather puzzled by my right hon. Friend saying that Royal Mail will be a publicly owned company; it will be a majority stakeholder company. If the democratic decisions have to be taken in the way that he says, what is in it for the private company coming in? It will not come here to be outvoted every single time it wants to make a change.

Patrick McFadden: I am making it clear that because the Government will still own the majority of the company, it will be a publicly owned company and will count as such. Privatisation is not our intention, but partnership on a minority basis can be of real benefit to the publicly owned Royal Mail by giving it access not only to capital but to the experience and commercial confidence needed to drive through change.
	There is another important point about this. A partnership can also help to make Royal Mail a bigger player at a time when European postal markets are liberalising and consolidating.

Several hon. Members: rose

Patrick McFadden: I want to make some progress.
	By the end of next year, there will be liberalised postal markets in most of the 15 European Union member states, and two years later throughout the whole EU. Royal Mail already has a presence in Europe through its purchase several years ago of the GLS parcels business. In future, there is likely to be further consolidation in the European postal market. Earlier this month, the Swedish and Danish authorities announced that they had signed the final shareholders' agreement to merge their national postal companies. A joint venture can make Royal Mail a bigger player in Europe and able to play a leading role as the market develops. We should not turn our back on those opportunities because ideology stops us from considering a partnership even on a minority basis.

John Gummer: If a private company owns part of Royal Mail, is it not the case that Royal Mail becomes a partly owned national company? It cannot be a wholly owned national company if somebody else owns part of it.

Patrick McFadden: And the Conservative party prides itself on knowing business. The difference between a majority and a minority shareholding is fundamental in business, and my point is that Royal Mail will remain a publicly owned company.
	If the work force fear the consequences of a partnership, I say this: industrial relations in Royal Mail, as Hooper pointed out, are in urgent need of a fresh start. Change has been hampered by a lack of trust between management and work force. In 2007, as the right hon. and learned Member for Rushcliffe said, 627,000 employee days were lost as a result of industrial action, accounting for 60 per cent. of the total days lost to strikes throughout the whole UK economy in that year. It is not just a question of that major strike, but the threat of other strikes, too. Disputes are frequently threatened, such as those threatened on pension changes or mail centre changes, which we saw in recent months, and they are hurting the company. They slow the pace of necessary change, and they hurt the customer and the mail market, as people are tempted to switch to other digital communications to meet their needs. For everyone to agree that they are up for change in general, but to oppose it in the particular is no way forward.

Several hon. Members: rose

Patrick McFadden: I will give way in a moment.
	We need a longer-term plan, with a proper buy-in from the work force, and an acceptance right through the company of what needs to happen. A reformed board, with influence at every level of the company and with the experience of going through such change, can offer the fresh start in industrial relations that the company sorely needs.

Michael Jabez Foster: My right hon. Friend is absolutely right to say that buy-in from the work force is key to the future of the Post Office and Royal Mail. On what he said about who controls Royal Mail, will any Bill that he introduces make it clear that the public and the Governmentthe statewill continue to have a controlling interest in the shareholdings, and that it will not be possible at any time for the minority interest to become a majority one?

Patrick McFadden: I said that we will make it clear that the company will continue to be a publicly owned company.

David Anderson: Is the Minister seriously suggesting to us that industrial relations will improve if we have a deal with a private partner with a track record of being a strike-breaker and a scab?

Patrick McFadden: If my hon. Friend is referring to the company that I think he is, he will find that it recognises trade unions and operates with them on a day-to-day basis. This is an important point. The idea that the industrial relations of the company are better as they are than they would be under a different arrangement does not bear comparison with the urgent need to improve industrial relations in this company.

Several hon. Members: rose

Patrick McFadden: I have given way a couple of times and I would like to turn to the question of regulation.
	Regulation, and how competition functions, is a crucial part of the picture and again one that the Opposition motion is silent on. The argument has been made that competition from other postal companies is at the root of the Royal Mail's problems. It is true that that has meant a loss of revenue, but as Hooper reports, that loss is more down to competition from new technologies than from other mail companies. Let me make the Government's position on this issue clear. Competition from other mail companies will not go away but, as we make the other changes, it is right that we look at the terms of that competition and its impact on the universal service obligation.
	Regulation will continue to be important in ensuring that the postal service maintains the USO in the wider communications market. As I said, Royal Mail as a company is in a unique position to deliver to 28 million business and residential addresses. The postal market needs a regulator that understands the wider communications market and the part that the post plays in that market. We believe that Ofcom will be able to fulfil that role and its primary purpose in regulating the postal market will be to maintain the USO.

Patricia Hewitt: Will my right hon. Friend confirm that Royal Mail has lost approximately five times more revenue as a result of the transformation to e-commerce, e-mail and so on than as a result of the competition that has been introduced to the UK market?

Patrick McFadden: My right hon. Friend, who has long experience of these matters, is absolutely right. Competition with other mail companies does matter to Royal Mail, but competition with other technologies has lost it far more revenue. The figure that she gives is correctly quoted from the Hooper report.

Geoffrey Clifton-Brown: Will the Minister accept that as Royal Mail is currently wholly publicly owned, if it is going to make important changes involving the loss of jobs, it should consult the public properly? It proposes to close a sorting office at Wotton-under-Edge, a small market town in my constituency in which the sorting office is a major employer. Royal Mail has refused to attend any public meetings or give a business case. Does the Minister not believe that it has an obligation to explain to my constituents why it is making such a change?

Patrick McFadden: The Hooper report states that Royal Mail needs to make changes to sorting and delivery offices and, given the automation that is occurring, that need is recognised throughout the company.

Philip Dunne: Will the Minister clarify once and for all whether the entities with which he is prepared to have discussions on competition will be precluded from being existing competitors of Royal Mail? Will he rule in or out private equity investing directly alongside the Government?

Patrick McFadden: Hooper is quite clear that he believes that a valuable partnership will be with a postal or network company that has carried out changes such as Royal Mail needs. I cannot comment on every discussion that the Department has, but that is the recommendation in the report and the outcome that we seek.
	I wish to say a word about post offices. I know that the debate is about Royal Mail, but right hon. and hon. Members care a great deal about post offices. The closures of the past year were difficult for local communities, but now that they are drawing to a close, the network is in a more stable position. The Government made clear the future of the Post Office card account shortly before Christmas, and we are now working with the Select Committee on Business and Enterprise and Post Office Ltd to identify future new areas of business. The Post Office is partly a social and community service, and the network of about 11,500 branches depends on Government subsidy to survive. We will keep that network in 100 per cent. public ownership, although of course most post office services are delivered by sub-postmasters, who are private business people and often have their own businesses attached.
	Like many Members, I want the Post Office's banking and financial services offering to be expanded. It is a trusted brand and has more branches than all the banks put together, so it has real potential in that area. However, with post offices accounting for a little more than one tenth of Royal Mail Group's overall turnover and even that proportion depending on subsidy from the Government, we should not pretend that such an expansion can solve its problems.

Alan Reid: The Minister is right to say that we have to expand financial services at post offices, but I draw his attention to the recent announcement by National Savings  Investments that holders of individual cash savings accounts will no longer be able to make cash deposits over the counter at post offices. Surely that is a retrograde step, taking yet more business away from the Post Office. Will the Minister contact NSI and reverse that decision?

Patrick McFadden: The Post Office has welcomed that, because it has its own product.
	I shall draw my arguments to a close. It has been put to us that there are challenges, but that with a slight increase in profits recently, Royal Mail is doing okay and there is no need for change. However, it is important to make it clear that the profits are tiny compared with the challenges that the company faces.

Rob Marris: Will my right hon. Friend give way?

Patrick McFadden: I am afraid that I must keep going.
	Much of the profit last year came from the European parcels business, and indeed the Post Office's share of the profit came from the Government's subsidy. The letters business is making a very small profit, against a turnover of some 7 billion, and when the chief executive of Royal Mail Group announced those results recently, he said:
	We must step up the pace at which we are transforming Royal Mail otherwise, as the recent Hooper report made clear, we face decline.
	Hooper suggested that there would be a small profit this year, but that the company would have a significant negative cash flow every year for the next four years. Royal Mail has told the Government that volumes are continuing to falleven faster than in the past two yearsand that that will have an adverse impact on future revenues and profits. Without further action, the position will be compounded by any steps that the trustees might need to take to tackle the pension deficit, which could double when it is revalued.

Rob Marris: I am grateful to my right hon. Friend and neighbour for giving way. I urge him not to accept the Conservative motion, which suggests that the Government press ahead rapidly. The issues are delicate and difficult, and I urge my right hon. Friend and the Government to proceed slowly, not rapidly.

Patrick McFadden: I certainly assure my hon. Friend that we will not accept the Conservative motion, though my invitation to the right hon. and learned Member for Rushcliffe stands.

Joan Walley: Will my right hon. Friend give way?

Patrick McFadden: I am sorry, but I must end my remarks shortly.
	Let me tackle stamp prices. It has been suggested that another solution to the company's problems could be to increase stamp prices sharply. The price of a stamp will go up by 3p in April, and it increased by 2p last year. We must remember that customers have a choice nowadays, and steep price increases are likely to accelerate the decline in the volume of mail. Such steep increases do not, therefore, offer an easy answer to the challenges that Royal Mail faces.
	Royal Mail must take modernisation further and faster than it has done. It must diversify its operations against a background of volumes of mail falling between 5 and 8 per cent. each year. To achieve that, it will need investment over and above what it has been allocated.
	The debate rightly concentrates on the merit of Hooper's proposals, but let me make one thing clear: if we do not act, the pension trustees, in the face of the new valuation, could ask for changes such as vastly increased company contributions to recover the deficit, thus placing further strain on Royal Mail, or vastly increased amounts of money from the Government for the escrow account, which acts as insurance and security for the pension fund. The Government cannot simply sign such a cheque without knowing that Royal Mail is on a more sustainable track for the future.
	Unless modernisation happens, the company will be ill equipped to deal with its challenges. It will be faced either with increasing prices, thereby worsening e-substitution, or a decline in the quality of service, possibly with the same result, and threatening the universal service obligation, which we are trying to protect. Of course, it would be nice if we could make the issue go away, but that would not present a solution to Royal Mail's problems. There has been a pattern in the past of settling rather than resolving difficult issues. That is why it is important to have a coherent package for the problems that Royal Mail faces, and that is what we have set out.
	We will not fall for the less-than-canny motion from the Opposition, which is silent about many of the company's challenges. Instead, we have set out a plan, which says no to the privatisation of Royal Mail; yes to keeping it as a publicly owned company; yes to pension security; and yes to a new system of regulation with the USO at its heart. Any legislation to implement those proposals will be fully and properly debated by the House. On that basis, I ask my colleagues to reject the Opposition motion and support the Government amendment.

John Thurso: I am grateful for the opportunity to discuss the Hooper report. When the statement was made, I said that it was important to debate the matter fully. Indeed, if ever an issue deserved a pre-legislative scrutiny process, surely this is it.
	Richard Hooper and his team have done an excellent job with the report, which is thoughtful and thorough. Whatever one's views of some of the individual points, the general thrust and conclusions cannot be ignored. Let me begin, therefore, by looking at the principal points, which are helpfully set out in the Headlines section of the report. Let me deal first with the universal service obligation. It is fairly hard to conceive of a report saying that the USO should be disposed of, but there were options for diluting it. I am extremely glad that Hooper rejected all those options. Not only does the Hooper report recommend the maintenance of a six-day-a-week USO to all addresses in the United KingdomI would qualify all addresses as the vast majority of addresses; a Mr. John Ridgeway on the Ardmore peninsula is still waiting for the resumption of his deliveriesbut it points out that the USO is very much part of the economic and social glue of our country. The USO must remain a six-day obligation, its coverage must be as near as possible to 100 per cent. and, as has been pointed out, it needs to be affordable. The report draws the clear conclusion that to maintain that kind of USO is not possible under the Royal Mail's current arrangements and in the face of competition from other media, particularly text messaging and e-mail.
	The second point is the need to deal with the pensions deficit, which continues to balloon, having been around 3.4 billion in March 2006. Hooper reckoned that it was around 5.9 billion, and given the movements of the markets, it has probably increased substantially since then. Both the deficit and the deficit payment are a serious drag on the company. Of the 13.5 per cent. gap that Hooper identified between Royal Mail's operating profit and the operating profit of the continental companies that he believed to be most efficient, 4.3 per cent. was made up by the catch-up deficit payment.
	Thirdly, the report emphasises the difference between postal servicesthat is, Royal Mailand post offices, and recommends that post offices should remain wholly in public ownership. That is a point with which I agree entirely. Hooper does not go any further on post offices, as that was not in his remit, but the report must be an opportunity to put the post offices on a sound footing. I shall return to that point in a moment.
	The fourth point that Hooper made relates to regulation. It is absolutely right that regulation should be dealt with, and I think that Ofcom is the proper body for that. Fifthly, the report makes it perfectly clearvirtually everyone agrees with thisthat the status quo is not an option. Royal Mail needs to change and modernise, and it needs to face external competition from outwith mail services. It needs, in Hooper's words, to transform and diversify. The conclusion reached is that achieving that requires introduction of expertise through a partnership management agreement with one of the private companies, which will bring commercial confidence, instil better practices and create the ability to acquire and access private capital. In that regard, the Government have indicated that they favour a sale of a minority stake in Royal Mail to a private partner. That raises some questions that need clear consideration.
	I shall come to those questions in a moment, but let me first touch on the motion before us, which the right hon. and learned Member for Rushcliffe (Mr. Clarke) moved. Broadly speaking, his motion says: We agreebring it on, to which I say: how wonderfully retro. What a thorough cast back to Thatcherismindeed, it is Thatcherism that even Mrs. Thatcher would not have agreed to. It is privatisation of the Chuck 'em all out into the cold hard world, the cold waters of competition and commercial reality and the job's done kind.
	Of course, it helps the right hon. and learned Gentleman that the Conservative party is broadly a policy-free zone on Royal Mail. I could certainly find nothing published on the Conservative website, although admittedly there may be something else, apart from the helpful admission made by his predecessor, the hon. Member for Rutland and Melton (Alan Duncan), that the Conservatives will continue to close post offices, as they did under the previous Administration. It is a shame that the right hon. and learned Gentleman chose to paint such an uninspiring and rather pass picture. It is certainly not one that I would ask my colleagues to follow.

Kenneth Clarke: I was waiting to hear the hon. Gentleman say whether he was in favour of partial privatisation, which I think we all agree is a perfectly accurate description of the Government's proposals. Are the Liberals still thinking about this complicated issue?

John Thurso: I am extremely grateful to the right hon. and learned Gentleman for that intervention. I draw his attention to the amendment that I tabled, which is a fairly accurate reflection of the policy that we adopted at our conference three years ago, which I believe is widely available. I shall come to that point in some detail in a moment.
	I want to look at the opportunities that flow from the report. The first is the real chance to help the post office network. I again want to make the distinction between the Post Office and the Royal Mail. Many of our constituents think that they are one and the same thing, but there is a real difference. Hooper recommends that the post office network remain in the public sector, with which I wholeheartedly agree, but I believe that we should go beyond that. We should take it out of Royal Mail Group and make it a separate entity, with a separate board dealt with by the shareholder executive, so that it is clearly and distinctly separate from Royal Mail and from whatever might happen to it. I would also like that board to have some stakeholder representation, particularly by sub-postmasters, as that would help to inform its future. A key point would be for the post office network to be a separately owned and managed entity that was not bound up in whatever future Royal Mail might have.

Patrick McFadden: I appreciate that the hon. Gentleman is setting out his party's policy on the company structure, but does he accept that about 30 per cent. of post offices' income comes from their contract with Royal Mail? Has he considered that when setting out his proposed structure?

John Thurso: Absolutely, and I would ask the Minister to ensure that there was a clear, transparent contract between the two entities. I am trying to draw his attention to the fact that it seems extremely difficult for an organisation that has taken in private equity to own part of another organisation that is said to be wholly in the public sector. I do not believe that an organisation can be wholly in the public sector if it is part of a group that has a minority stake from somewhere else.

Patrick McFadden: The Post Office already has a partnership with the Bank of Ireland, which I think the hon. Gentleman will find is a private sector organisation.

Rob Marris: This week.

John Thurso: Perhaps the Minister might like to observe that, with friends like that, who needs enemies?
	The Post Office needs capital and, as part of what goes on, it is important that some of the capital raised should go to the Post Office. The Minister alluded to the fact that capital is needed to transform the future of the Post Office, to help it to become viable. I see two ways in which that could be done. The first involves the creation of what has been termed a post bank. The second would be for post offices to become the first point of contact between the citizen and the state. As so many local offices and benefits centres have closed, so the ability for people to interface with a human being to deal with simple questions has disappeared. That is a job that could be done by post offices for a modest fee, and it would save the Government a great deal of administrative money at a later stage.

Albert Owen: The hon. Gentleman is making an interesting point. Does he agree that it is important to set up a model whereby local authorities can be the driver of local services in the local community?

John Thurso: I have indeed discussed the potential for putting contracts into post offices with my own local authority, the Highland council. It pointed out that it had very good service centres, but that some areas were not covered by them. There is certainly room to look further into that, so the hon. Gentleman has raised a good point.
	Let me deal now with Royal Mail. It seems to me that allowing an entity somewhere simply to take a minority stake to become a business partner combines pretty much the worst elements of all worlds. If it is simply a matter of gaining access to capital and nothing else, there is a range of alternative mechanisms for accessing private capitalnon-voting equity, bonds, preference stock, which the Government love at the moment, loan stock and so forth. There is also the possibility of creating a 50:50 joint venturein other words, doing nothing about Royal Mail itself, but creating a 50:50 joint venture with both sides placing into it what they want.
	There are many ways of dealing with the problem, but one of my worries about taking a minority stake is how it can be valued, particularly at this time in today's markets. How do we decide how much it is worth? How much equity is sold for what price? If the stake is to be 10, 25, 35 or 49 per cent.there is quite a difference between those numberswe should bear in mind that a single minority shareholder will not go sticking his money into a company unless he has what is known as a shareholder's agreement, which sets out the terms that apply, making it clear whether and when the public sidethe Governmentcan or cannot do certain things. With all those points unresolved and undiscussed, the claim that the Government's proposals offer secure public ownership seems to me to be ever so slightly disingenuous.

Peter Luff: If I understand the hon. Gentleman correctly, what he is citing as a problem is actually one of the strengths of the proposal, as it will actually commit the Treasury to behaving in a responsible way towards Royal Mail Group, which, frankly, it has not done for 20 years.

John Thurso: I bow to the hon. Gentleman's superior knowledge in this field.

Jonathan Djanogly: Does the hon. Gentleman agree with the Minister's point that, by having an outside third-party investor, the trade unions will, in effect, be better behaved than they have been in the past?

John Thurso: That is precisely the point I am coming on to. I wonder whether the hon. Gentleman will allow me to develop it in my own words and intervene again later if he wants to.
	Hooper makes it clear that the commercial partnership is far more importantor at least equally as importantas the capital. His key point is the need for engagement between the unions, particularly the Communication Workers Union, and the modernisation process. That is something that requires trust, so I want to put a suggestion to the Minister about how that might be achieved. Simply banging in and issuing a slug of shares for money will not necessarily accomplish that task. My suggestion to him has been part of our policy for three years, so I hope he looks very carefully at it. It is to give the work force a substantial holding in Royal Mail as part of the overall package. It is not quite, as some have said it is, the John Lewis model, because that obviously requires 100 per cent. ownership, but I submit that providing a real equity stake in the company could go quite a long way towards aiming all the partners and stakeholders broadly in the same direction and might help to deliver some of the trust that Hooper says is so greatly lacking.

John Gummer: Does the hon. Gentleman agree that even if the Government took the route that he is suggesting, and certainly if they took what appears to be their own preferred route, it could not be said that the Post Office would become a publicly owned company in the sense that it is now? Surely it is to misuse words to suggest to Labour Back Benchers that they are not telling the truth when they say that this is a partial privatisation or a partial mutualisation.

John Thurso: I am not terribly hung up over whether it is a partial privatisation or a wholly public non-privatisation. What concerns me, as I said earlier, is the creation of a modernised Royal Mail that is fit for purpose and delivers on a universal service obligation, and a post office network that is clearly and obviously in the public sector.

Simon Hughes: May I reinforce what my hon. Friend is saying? I have talked to people who work for Royal Mail in a big sorting office just over the bridge near my constituency. When I have put to them the alternativesanother private sector company coming in with a minority shareholder, or the workers having shares and ownershipit is blindingly obvious which of those alternatives has the better chance of securing a good working relationship, and it is not the first.

John Thurso: I am grateful to my hon. Friend.

Julie Kirkbride: I find the idea of greater employee participation and ownership very attractive, but it raises an obvious problem: where would the money for investment come from? Would the employees be expected to pay for their shares, rather than being given them? If not, where are we to find the money with which to modernise Royal Mail?

John Thurso: Let me make clear that I am in favour of an injection of finance, and in favour of a partnership. What I am saying is that as part of that overall deal, proper consideration could be given to the employees through the granting of shares so that they would have a real stake.

Michael Weir: Will the hon. Gentleman give way?

John Thurso: Yes, for the last time.

Michael Weir: Will the employees be able to trade the shares? Is the hon. Gentleman suggesting a combination of private enterprise, perhaps involving a private company, and employee and state ownership? Given such an arrangement, how would the profit be divided?

John Thurso: If the hon. Gentleman will forgive me, I will not give him a lecture at this stage on how these things work. I hope he will accept that I have visited a number of companies in which shares are traded, but are traded within the trust that owns the shares for the individual employees.
	I cannot, in all fairness, ask my hon. Friends to support the Government amendment, which, as has already been pointed out, seems to add to the confusion by using phrases such as secure in public ownership when Royal Mail clearly is not in that position. I have to say that I cannot ask them to support the Conservatives' motion either. I will say to the Minister, however, that if he is prepared to examine the case that I have presented for the Post Office and employee involvement, I am sure I shall be able to engage with him constructively.
	The British people deserve and expect both the protection of their post offices and a competitive USO-based postal service. The status quo is not tenable. We must look to a future that is well structured and based on commercial competition, but also, critically, on trust between the stakeholders.

Several hon. Members: rose

Mr. Deputy Speaker: Order. I remind the House that Mr. Speaker has placed a limit of eight minutes on Back-Bench speeches. It is fairly obvious that, given the time available, that will restrict the number of Members whom I am able to call, so I propose to try to ease the situation by reducing the limit to six minutes for all Members called after 6 pm.

Patricia Hewitt: I am grateful for the opportunity to speak, and for the opportunity to follow the speeches that we have just heard. I must, of course, declare an interest. As noted in the Register of Members' Interests, the Communication Workers Union has been a generous donor to my constituency campaign funds in the last two general elections. However, its members know that, on this issue, I do not agree with them.
	I must also say that I have considerable sympathy with my right hon. Friend the Minister. I believe I am right in saying that I was the longest serving Secretary of State for Trade and Industry since the 1950s, and in that capacity I had the great pleasure of being the owner, on behalf of the public, of Royal Mail. In that period, we made substantial changes to Royal Mail's leadership, financing and structure. We brought in a completely new board led by Allan Leighton, to whom all of us owe considerable thanks. We put in additional funding. We changed the balance sheet. We introduced real support, with the help of the TUC, to try to create the social partnership that was so obviously needed between management and trade unions.
	We did all that, and some change came. Costs were reducedMr. Hooper says by about 0.5 billion, while Royal Mail says by more than 1 billion. Customer service was improved, at least for some years. Losses, which in those days were 1 million a day and threatening to rise, have been turned into a fragile, to use Royal Mail's own word, profit just last year. However, the realityto which my right hon. Friend the Minister clearly pointedis that the changes that have taken place in Royal Mail in the last eight years have not gone far enough or anything like fast enough.
	Over the past decade and more, I have been a regular visitor to my local sorting office in Leicester. I have seen one very welcome change: industrial relations, which were pretty parlous 10 years ago, are now, so far as I can tell, reasonably good. Sadly, however, that is not the picture across Royal Mail. Apart from that, as far as I can see almost nothing has changed in that sorting office. I welcome one aspect of that: many of the Post Office men and women whom I met 10, 11 or 12 years ago are still there, absolutely dedicated and loyal Royal Mail workers whose commitment to the organisation is one of its greatest strengths. However, the lack of change in the sorting methods is shocking. My right hon. Friend the Minister rightly referred to the business of sorting post into the walks that are then taken out. What I saw just before Christmas was exactly what I saw more than 10 years ago: postmen and women who are going to go out on the walk at about at 8 o'clock coming in at 5 or 6 o'clock in the morning and hand-sorting the mail into old-fashioned cubby-holes that were probably there 50 or even 100 years ago. A system that has been 85 per cent. automated by Deutsche Post, TNT and other postal operators and competitors is wholly unautomated in my own and many other local sorting offices.
	That lack of change, coupled with the transformation in the technologies we all now use, is probably the central reason that has led to the crisisthat is what it isin Royal Mail's current position. Royal Mail itself says the overall financial situation is increasingly fragile. The universal service obligation lost money last year. The pension scheme is completely unaffordable by the company on its current performance. Postcomm says Royal Mail in its current form is not sustainable. Richard Hooper says that the status quo, and in particular the USOto which all Members, at least on the Labour Benches, are completely committedis under threat. The truth is that only about a third of the original master modernisation plan, which was drawn up under Allan Leighton's leadership of the new board, has actually been implemented, and only about 85 million of the Government's financing facilities that were put in place in 2001-02 and renewed only a few years ago has actually been used.
	Royal Mail desperately needs a new capital injection and a much faster pace of modernisation, in particular to deal with the massive inefficiency in the running of local sorting offices. That modernisation would benefit employees, who should not be working in 19th century conditions in a 21st century Royal Mail. It also needs a solution to the pension fund deficit. The Minister rightly said that once the new valuation is made, given what has happened to stock markets in this global financial and economic crisis, that deficit will be frightening.
	Beyond all those changes, what Royal Mail needs is an injectionnot just at the top, but all the way down, through senior, middle and junior managementof new people who have expertise and experience gained in another organisation. I am thinking of a network organisation, preferably a postal one, that has already been through this difficult transformation, on which Deutsche Post and TNT embarked in the 1990s. That expertise and experience exists, but it is not to be found in Royal Mail. It needs to be introduced through a strategic partnera minority partner. That partner also must demonstrate the track record of social partnership working that we have tried to create in Royal Mail. Clearly, the management have not succeeded in that, but neither has the leadership of the Communication Workers Union, who accept the need for change in principle, but have not been willing to make those changes in practice.

Michael Jabez Foster: rose

Patricia Hewitt: I simply cannot give way, given the time.
	For all the reasons I have outlined, I strongly support the Government amendment, and I wish the Minister every success with this difficult piece of work in progress.

Peter Luff: It is a pleasure to follow the right hon. Member for Leicester, West (Ms Hewitt), who made a characteristically thoughtful and well informed contribution, which was marred only by one brief lapse into partisanship; although I speak as Chair of the Select Committee on Business and Enterprise, I hope I speak for the whole House when I say that we all support the universal service obligation.
	My Committee is in the middle of two relevant inquiries into this subject. One deals with the Hooper review and mail serviceswe are having a further evidence session next week with Royal Mail and Postcommand the other one, to which the Minister referred in his opening remarks, deals with the future of the post office network. I urge hon. Members from all parts of the House to give us their views about the options for sustaining the future of that network. All this means that my hands are a bit tied in this debateI have no reports from my Committee on which to rely, so I must be slightly restrained in the expression of some of my views.
	It is important to acknowledge, as this debate has, the huge range of problems facing Royal Mail in particular, as opposed to Post Office Ltd. They include: poor industrial relations; the growth of electronic communications and the recession, which together mean declining mail volumes in the UKthose volumes declined by 2.5 per cent. last year and are projected to decline by 4.5 per cent. this year and by 8 per cent. next year; and a failure to invest over at least two decadesmy argument with the Government amendment is that it singles out the Conservative party for attack, but this Government also bear some responsibility for the failure to investwhich needs to be addressed now.
	Further problems include a very rapid growth in competition for business bulk mailit has perhaps been more rapid than Postcomm recognised, although it has not surprised me; serious doubts about the effectiveness of the regulator, which, let us not forget, thought, during the recent price review, that mail volumes would grow; conflict between the twin regulatory objectives of the universal service obligation and competitionI welcome the fact that the Government amendment talks about the USO in such clear terms, because that gives guidance to the new regulator; a massive pension deficit, to which reference has been regularly made; and problems, which have not been mentioned today, over pricing of the competitors' access headroom arrangementsthe so-called final mile. If I had the time, I would explain to the House how that actively disincentivises efficiency gains by Royal Mail Group.
	Of course, that leads to the most urgent need, which is for capital and expertise in order for the organisation to modernise and compete. I think that all in this House acceptI hope we dothe Hooper review's principal conclusion that the status quo is not tenable. That brings us to the three crucial issues in the reviewpensions, the partner and Postcomm. There is a vital fourth onethe need to secure better industrial relations in the company. I shall not talk about it today, but it is an overriding issue that must be taken into consideration.
	I have reservations about the proposed merger of Postcomm with Ofcom, but I accept the logic and it is probably the right thing to do. The Committee will look at the merger carefully, because there is a serious risk of regulatory overload on Ofcom. It is already charged with the complex issue of telecommunications regulation, although in Europe most regulators share postal services and telecommunications responsibilities. Ofcom also has the whole broadcasting arena to deal with, which often takes up a lot of time. Jonathan Ross can trump some important strategic issues concerning how the other aspects of Ofcom's work should be regulated.
	The Government have a problem with regulators generally. They tend to describe regulators as independent and delegate too many policy decisions to them. The regulators must be economic regulators, and the Government must set the policy framework, which is why I welcome the statement about the universal service obligation in the Government's amendment. We must be clear that Ofcom, when it becomes the postal services regulator, should not be required to take too many public policy decisions, which should be the preserve of Ministers.
	Broadly speaking, the regulatory aspects will not be too controversial. The pension deficit, however, raises more difficult questions. The Government want to enter into a hugely expensive commitment, which will be a huge commitment for the taxpayer in the long term. I am trying to get to the bottom of why the pension problem is so bad for Royal Mail Group. I suspect that the real explanation is that it is an exemplar of the bigger, hidden problems throughout the public sector. Because Royal Mail is a trading company and has to be transparent about its pension fund, it has to explain the issues with it, but I suspect that similar issues lurk all over the public sector and Royal Mail's problems are not that unusual. Of course, any transfer of the pension deficit to the Exchequer will be subject to EU state aid scrutiny. The precedents are reasonably encouragingthere are different pension arrangements in France, but when La Poste transferred its pension deficit to the state, it did receive clearance, albeit in slightly different circumstances. One very important point about the transfer of the pension deficit is that any settlement must be reflected in the price paid by a new partner or partners for a stake in the company free from that debt.
	I turn now to the crucial question of the partner. Is it just a matter of ideologypublic good, private bad? I confess that my preference is for commercial activity to be undertaken by the private sector, but hard questions have to be asked. If the strategic partner is an existing mail operator, is the loss of competition in the market a price worth paying? Does the doctrine of unripe time apply? It does not seem an especially good time to hand over capital raising to the private sector. By the way, if a 30 per cent. private stake in RBS means that it is a private company, how does a 30 per cent. private stake in Royal Mail make it a public one? I have some intellectual difficulty with that.
	Hooper says that a partner is needed for three reasonscapital, expertise and political stability. The Committee will need evidence for that claim, and especially for why all three objectives can be delivered only by the one mechanism of introducing a private sector partner. On the firstcapitalthe state is providing capital at present and we have discussed that with the Minister. It is provided on commercial terms, as it has to be, butas he explainedit has not had EU state aid clearance yet. Big questions would be asked about any further applications for capital from Royal Mail Group, and they might not receive favourable answers.
	The second reason is expertise. I thought that Allan Leighton and Adam Crozier were brought in to provide expertise. The right hon. Lady suggested that expertise was needed throughout the organisation, and that may be the explanation. In the past, the Government have sought to address the expertise question by bringing it in from the private sector.
	On political stability, I understand the point that having an arrangement with a private sector partner locks the Treasury into a new, fairer way of treating Royal Mail. Richard Hooper made a great deal of that point in giving evidence to the Committee a few weeks ago. But is there another way of achieving that political stability, which the company clearly needs and has not had for far too long?
	My instincts are with Hooper, but I understand the concerns that have been expressed. The Government have to produce compelling, evidence-based reasons for the approach. Royal Mail will be an attractive business without a pension deficit, with a more intelligent regulatorpeople are critical of Postcommand with the USO to give it market dominance. So if it is a bad time to raise capital, it is also a bad time to price an asset such as Royal Mail when it is freed from all its obligations in this new world. I hope that the price will at least include an earn-out over several years, to ensure that the taxpayer's interests are properly looked after. On a happier note, however, we must not forget that a 70 per cent. holding should still mean a flow of dividends back to the Treasury for a very long time.

Geraldine Smith: I am delighted to have an opportunity to vote today against the part-privatisation of Royal Mail. I am not too sure that I could vote for the Minister's speech, if there was a vote on it, as he also seemed to be talking about part-privatisation, but the Government have tabled a sensible amendment and I will support that.
	There is great strength of feeling about this matter. One hundred and thirty Members of this House, most of them Labour, have signed an early-day motion opposing postal privatisation, but the strength of feeling is not confined to Parliament. An independent public opinion poll recently found that 75 per cent. of people who had heard of the possibility of Royal Mail being privatised opposed the idea. When respondents were asked about the possibility of foreign ownership, the proportion strongly opposing the partial privatisation of Royal Mail rose to 89 per cent.
	I represent a large rural constituency, and people there realise that part-privatisation means higher prices and reduced services. The actual cost of sending an item from London to the Isle of Skye is 28, so I can understand why the Scottish National party has concerns about partial privatisation. There has been talk of dinosaurs, but the only dinosaurs are those people who do not realise that privatisation is going out of fashion. We have had to rescue the fat cat bankers who got us into so many difficulties and we are nationalising the banks, so privatisation is not the British public's flavour of the month.
	The Hooper report is flawed. Hooper admits that there is no agreement between Royal Mail and the regulator about the business's basic operating costs, but at no point does he seek any independent costings. How can he reach conclusions on a business when he does not know the cost of providing the service?
	Earlier, the Minister said that the universal service obligation was making a loss, but the regulator said that it was making a profit. Between 1981 and 1999, Royal Mail was forced to hand over 2.4 billion in profits. The then Conservative Government starved it of investment at a time when other European countries were investing in their postal services. They were modernising and automating their postal operations while the British Government were taking profits away from the business. Moreover, contributions holidays meant that the employer did not contribute to pension schemes for many years.
	Recently, the UK has gone ahead of the European Union with postal liberalisation. We have allowed private postal companies like TNT to come in and cherry-pick all the best business, yet Royal Mail cannot enter those markets because they are closed. TNT has retained a monopoly on mail of less than 50 g in weight: Royal Mail cannot touch that, but TNT can come in and take our profits.
	We need a fair pricing policy for Royal Mail. The Hooper report acknowledges that prices in the UK are low, relative to many other European countries. For example, to send a first-class item weighing 100 g, Post Danmark charges three times the Royal Mail price. Sweden's Posten and Belgium's La Poste both charge more than twice that, while Deutsche Post and TNT deliver a letter of 100 g for around three times the price charged by Royal Mail. So we know what is going to happen to postal rates for the general public in this country when the private sector gets involved.
	The UK is also the only European country to operate a peculiar form of downstream access arrangements that have led Royal Mail, and therefore the British taxpayer, to subsidise the businesses of private competitors. Royal Mail delivers items at a loss: what business with true commercial freedom would be obliged to accept that it made a loss on every item? That is nonsense, but the regulator fixed a price, and what the regulator knew about postal services could be written on the back of a postage stamp.
	Some 2 billion has been lost in revenue in the past five years, because during the price control period postage rates were held at an artificially low level as a result of Postcomm's mistaken forecast about the failure of mail volume growth. Postcomm got it wrong and, as a result, Royal Mail lost 2 billion, but Hooper refuses to take a view on pricing. He just defers the decision, and no one seems to be mentioning the issue. Pricing has not been taken into consideration, and what Royal Mail really needs is a fair pricing policy. Despite all those challenges, this year Royal Mail has managed to make a profit of 255 million; that is just for one quarter. That is compared with a figure of 162 million for the whole of 2007 and 2008.
	What is the solution for Royal Mail? First, the Hooper report has taken no account of the impact of the recent 3p tariff increase in assessing future profitability; that has not been reflected in the costing. Changes to downstream access are certainly needed. That could stem the loss of revenue to private competitors, and turn Hooper's projected profit forecast from red to black. If the Government took responsibility for the pensions deficit, as they have said they will, Royal Mail would save an additional 280 million a year for the next 15 years. Keeping the company wholly in the public sector would mean that the money could be used for future investment, rather than just profit taking.
	Finally, there needs to be greater investment and modernisation. That can be achieved if Royal Mail starts spending the 600 million that it has already borrowed from the Government to modernise. I actually speak to postal workers; I spoke to a Communication Workers Union area delivery representative, and found that no one had even approached him about walk sequencing. As for the CWU nationally, the unions have not been approached about all that new technology. When they have been approached, agreements have been reached. In the past few years, 40,000 Royal Mail jobs have been lost, so we are talking about a union that is prepared to make hard choices.
	We need a bit of information in this debate. Too many people are making statements who know very little about the operation of the British postal service. As for new, fresh, British top management, I think that the gene pool is wide enough for us to find those people in this country; we do not need foreign managers. Is my right hon. Friend the Member for Leicester, West (Ms Hewitt), suggesting that we employ 11,000 new managersthat we sack all the existing management and bring in Dutch managers? What does she mean? What are the practicalities? It is nonsense. We need British management

Mr. Deputy Speaker: Order.

Charles Hendry: It is a great pleasure to follow the hon. Member for Morecambe and Lunesdale (Geraldine Smith). I do not agree with much of what she said, but she has been a doughty and determined defender of postal services. It is sad that we have to hold a debate about the very survival of one of most loved services. There is no doubt that Royal Mail has been an incredibly highly prized service. The concept of the universal service obligation means that post is delivered to every single house every day. Royal Mail has an excellent delivery record, as the hon. Lady said, certainly in comparison with many other countries, and the price has been very favourable, given the cost of delivering letters.
	The sadness is that, at best, the Government have allowed the service to wither on the vine over the past 12 years. At worst, we could say that they have comprehensively trashed it. First, the Government did not secure a level playing field. International operators can come to the United Kingdom to take some of the most lucrative parts of the business, perhaps making them loss leaders before making further advances. British postal services cannot provide those same services in other European countries. The Government have been negligent in not pushing the issue further and not seeking a level playing field for Royal Mail overseas.
	Secondly, the Government are guilty of not having had a vision for the postal service and Royal Mail more generally. As a consequence, the management of Royal Mail have been left to manage the decline of the service. We have lost the Sunday collection. The firstindeed, the onlypost arrives later and later, and the second delivery has been cancelled altogether. We have seen Saturday collections being moved to earlier times. I went past a post box the other day where the last collection on Saturday was at 9.15 am, so gone is the late morning collection, gone is the Sunday collection, and it is no longer the convenient service that it used to be.
	We must be fair and say that that is not the responsibility of the managers. They have been trying to manage a difficult business through difficult times and they faced a triple squeeze. I pay tribute to Adam Crozier for much of the work that he has done and for his genuine zeal and enthusiasm to deliver a 21st century service. He has been squeezed by the financial pressures that we heard about in the excellent speech from my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke), by the huge pension fund deficit, which would technically make the Royal Mail insolvent, and by increased competition both from other services such as e-mail and from other operators.
	Equally, we should not blame workers. There are, of course, major problems in some of the cities, but the postal workers in my constituency are incredibly diligent, hard-working, enthusiastic people who provide an outstanding service. From my contact with thempeople who have worked in Royal Mail for many years, in some cases 20 years or moreI know that they want to deliver a continuing good service in the years to come and they recognise the need to modernise. The challenge will be to carry them with us during that period of change.
	It is right that the Business and Enterprise Committee will be asked to look into how the Post Office can offer services more akin to those of the financial services offered by banks. I agree with that because we suggested it. It was the Opposition motion last year that suggested that post offices should offer a wider range of services, but the Government Whips marshalled their troops to vote it down.
	The sadness and the irony of the situation are that a Government with vision would have decided on the services that Royal Mail and the Post Office could offer, before deciding to slash and burn their way through the post office network. The process should have been completely reversed. We should have looked at how we could extend the services and how post offices could offer more services to the community and then determined the size of network necessary to deliver that, rather than doing it the other way round.
	That is the charge that goes to the heart of the Government's failings. There has been no vision of how to go through the process, and they have ended up confused and unable to see their way forward, as was evident from the Minister's speech today. Royal Mail needs a massive injection of finance. It needs to modernise its processes and to invest in reskilling its work force. It needs to address the pension fund problems, about which we have heard so much. It needs to be able to compete with well-resourced international businesses.
	That means that there must be a new approach, and part-privatisation must be part of that process. There must be an opportunity to engage the work force and there may, therefore, be opportunities to involve them as shareholders in a revitalised business. But the Minister must accept that what the Government propose is part-privatisation. It is not full privatisation, but bringing in other investors is, by definition, part-privatisation. He should have the courage to say to the House that that is what the Government propose. We will support him in delivering that, because it is the only way to deliver the change that this vital service needs.

John Heppell: It is a pleasure to take part in this debate, especially facing my neighbourI almost said my hon. Friendthe right hon. and learned Member for Rushcliffe (Mr. Clarke), whose contributions I always value and whose judgment I sometimes doubt. I know he was one of the first people to predict the present economic crisis. The difficulty was that he predicted it in 1997, 1998, 2000 and so on, until the present day. He might say that he is a man ahead of his time. Another phrase comes to mind; it seems to me like premature speculation.
	I do not share the view of my hon. Friend the Member for Liverpool, Walton (Mr. Kilfoyle) that the motion moved by the right hon. and learned Member for Rushcliffe was to do with wrong-footing the Labour party, although I do think that was part of it. It was quite clever to pick the emotive wordsI do not want to get hung up on the point about whether it is privatisation or not, but the reference to partial privatisation was certainly going to be a red rag to many of my colleagues. That goes without saying. I think the right hon. and learned Gentleman realised that by doing that he was concentrating the debateor certainly the Labour speeches.
	In some respects, however, I think there was a simpler reason why the right hon. and learned Gentleman needed to concentrate on that one particular point. Hooper makes it quite clear:
	Our recommendations are a package. Each element of the package is needed if the universal service is to be sustained: modernisation achieved through partnership, tackling the pension deficit, and changing the regulatory regime.
	I do not think the right hon. and learned Gentleman can agree with the rest of those recommendations. He can say he welcomes them, but they are not contained in the motion. Why does the motion not say that we will back Hooper on all his recommendations? When we take a long cautious look at the legislation, rather than a rapid look, and when we decide what we are going to do, I suspect that in Committee and at other stages, there will be a fair amount of opposition from those on the Tory Benches to the regulatory regime that we propose. History suggests that that will be the case.
	I suspect it is also the case that we will not get any guarantees on the pension deficit either. I may be wrong, but when we are talking about an Opposition who are committed to cuts in public services across the board in every area, including in this Department, why would Royal Mail pensions be left out? Why would the Opposition decide, Oh yes, we'll find the 7 billion, 8 billion or 9 billion for that while we're cutting the other services? That just does not ring true to me. It does not chime with what we have heard in the past. The right hon. and learned Gentleman's predecessor as shadow Business Secretary would not even give a guarantee about the Post Office. I know that the Post Office is not part of today's debate, but the Government have made a 1.7 billion commitment to keep the post office network. When asked about that, the previous shadow Business Secretary, the hon. Member for Rutland and Melton (Alan Duncan), would not give a guaranteeI have the quotes.

Charles Hendry: Perhaps the hon. Gentleman should go back and look again at that debate. I responded to it, and I gave a clear, categorical assurance that that would be the case.

John Heppell: My hon. Friend the Member for Reading, West (Martin Salter) asked the then shadow Business Secretary:
	If I am to be tempted to vote for the motion, will he give an undertaking on behalf of his party to put 1.7 billion of investment into the network so that it can be sustained in a good old socialist fashion up to 2011?
	The then shadow Business Secretary said:
	I will not do that.[ Official Report, 19 March 2008; Vol. 473, c. 950.]
	That is fairly specific. If I am wrong, I would be happy to give way to the right hon. and learned Member for Rushcliffe so that he can get up and give a guarantee now. As we are talking about the Hooper review, will he give a guarantee that the Opposition will back the Government's view and do something about the pensions deficit?

Kenneth Clarke: There is absolutely no dispute from the Opposition or anywhere else that the accrued pension rights of those in the pension fund must be protected. It is a question of how that is financed. The hon. Gentleman appears to believe that the Government are committing themselves to injecting 7 billion to effect that guarantee. I do not think they are. Our position at the moment, which is why the motion is how it is, is that we are waiting for the Government to spell out how they will address the pension deficit, but the Minister for Employment Relations and Postal Affairs studiously avoided giving any detail about how he was going to do it.

John Heppell: I suspect that that will not be the case. Just this week, the Mayor of London, who used to be the hon. Member for Henley, was pronouncing about public sector pensions and how it was not our job to protect them. I understand the argument that the Tory party would make. It would ask why public sector pensions should be protected when people with private pensions, who are going broke, are not, and then there are the people who have no pensions. Taxpayers have to pay for that public sector protection. Given that people who have put their money into housing have lost 15 per cent. and that pension funds are losing about 35 per cent., the argument that the Government should not intervene to find the money for the pensions is powerful.
	However, there is a powerful argument the other way, and I am not just talking about the fact that many of the people involved got the pension rights by accepting fairly low-paid public service jobs, although that is one point. In this case, another argument can also be made. The package is not just to protect thousands of peoples' pensions; it will modernise Royal Mail, set up a new regulatory regime and guarantee the universal service obligation.
	The package will also raise private sector money. I might be at odds with my colleagues on this, but I have no problem with that, although I am not sure how much should be raised in that way or whether another mechanism could be used. Hooper was fairly specific on the issue; it is not only about the money that a private sector partner would involve. He says:
	We recommend a strategic partnership between Royal Mail and one or more private sector companies with demonstrable experience of transforming a major business, ideally a major network business.
	In talking about her experience with TNT and Deutsche Post, my right hon. Friend the Member for Leicester, West (Ms Hewitt) made it clear that those companies have experience of making a company modernise and become more efficient. Many of my comrades have sentimental views about Royal Mail and the Post Office and those views are shared by many across the country. My comrades want to protect the services, and I think that Hooper does as wellbut he wants to do so by doing what is necessary to protect them. The Hooper review is called Modernise or decline. He is right about one thing: doing nothing, and taking the usual Tory line, is not an option. We need to be very proactive.
	There is a problem with everyone wanting to cherry-pick from the report. The report holds together well, althoughI will be honestthere are bits of it that I do not understand: I could not quite understand what the hon. Member for Caithness, Sutherland and Easter Ross (John Thurso) was saying about it. However, the details can be worked out in Committee.
	Just one last word

Mr. Deputy Speaker: Order. I am afraid that the hon. Gentleman had to be pipped at the post.

Dai Davies: I shall be very quick, Mr. Deputy Speaker, so that more Members can speak.
	I echo the sentiments of the hon. Member for Morecambe and Lunesdale (Geraldine Smith); I only wish that she had had as much time as the Front Benchers. I want to make four quick points. First, the Government said that they were in no rush, and I urge them to leave the decision until the next general election, to put it in their manifesto and to let the people decide. In my constituency, the people want the Post Office and Royal Mail to be kept in public ownership.
	My second point is that we all agree on the need to modernise, but where have we been? We talk about the equipment that Royal Mail has to use. Where have we been in changing that, and what has the chief executive done to bring that about? What have we paid him for not doing it? Huge amounts of money.
	Thirdly, a level playing field has been mentioned on numerous occasions. The post office in my constituency delivers for the last 2 miles, which is the most difficult part of the delivery. The TNTs of this worldthe private companiesget the cream, while the people at the sharp end are left with a really difficult job. I urge any Member who has not visited a sorting office or walked some of the patches to which our postmen have to go, to give that a go. Has Hooper done it? Did he visit the sorting offices and speak to the posties? He certainly did not do so in my constituency.
	Fourthly, we have seen what greed has done to the banks; the drive for profit and more money has almost destroyed the financial system of this country and across the world. I urge the Government to consider that, and not to allow the same to happen to Royal Mail.

Albert Owen: I welcome this debate on Royal Mail. I also welcome the shadow Business Secretary, who is no longer in his place, to his new role. I can understand why he has been brought into it, because he was certainly entertaining, and the Conservative party needs an entertainment officer as they have not had one on such issues for some time. I did not realise that he had been in charge of the Post Office. I remember disagreeing with him when he was in charge of health, education and the economy. However, I agree with him on many issues, including Europe, and I agreed with him when he told Mrs. Thatcher that it was time to go. It is a shame that he is not in his place, because I am trying to offer him some warm words. Nevertheless, I cannot agree with his motion because, as my hon. Friend the Member for Nottingham, East (Mr. Heppell) said, it is just mischief-making, and this is a serious debate about a serious issue.
	I welcome many of the interesting recommendations made by Hooper in his report, particularly on the universal service obligation, which is very important to areas such as mine which are on the periphery and rely on the six-days-a-week service. We do not have very fast broadband and we have a poor gas network, but at least we have our USO. We need the post delivered on time in a daily fashion like the rest of the United Kingdom.
	When the Business and Enterprise Committee considers the details of the future of the Post Office, I urge it to develop the issues that the Government have raised about establishing better financial services for the Post Office network. That is a good idea, and it has come not only from the Conservative party; it has consensus around it. Among the best services that the Post Office provides is the exchange service for the pound against foreign currencies, where it has been very successful.
	On the Post Office card account, the Government were right to provide that security and foundation to the post office network for the future, and we need to build on that. Given the crisis in the financial sector, the trusted brand that is the Post Office is a good way of providing such services to local communities across the United Kingdom of Great Britain and Northern Ireland.
	I do not have much time left to give an alternative to what has been said about this issue being just about privatisation and the public sector. There are other models that the Business and Enterprise Committee and the Department should consider. In Wales, we all get water provided by Glas Cymru, which is the owner of Welsh Water. It is a not-for-profit organisationa company limited by guarantee. It provides an excellent service, and Hooper dismisses it too quickly in his report. It is a successful model that could be used in delivering monopoly services such as mail, although I understand that there is the issue of European regulations. Its activities are funded and financed by bonds. It has within its organisation specialist contract partners employed by Welsh Water following a procurement process.
	That business model improves service delivery by employing the best contract partner for each distinct activity within the business. Looking at the postal business globally, I can see that type of model helping to deliver services. It is an example of the kind of partnership within a monopoly that Hooper dismisses so quickly. The company also has the unique distinction of paying annual bonuses to its customersdividends are given on an annual basis by reducing the billsand it is able to get guaranteed loans over a period whereby it can reinvest in the company infrastructure. That is also worth considering when we talk about universal postal services. This is not about private versus public alone; we need to go beyond that.

Phil Wilson: Does my hon. Friend agree that we need to resolve the problems around Royal Mail under this Government? If the Tories had their way, they would probably privatise it in its entirety?

Albert Owen: I was not going to go down that partisan route, but I do worry about privatisation and the Conservatives. Royal Mail is the only organisation left that they did not privatise before, so it would be the first to go if they came back to office; they would start where they left off. The railways are a good example of the mess that they made. I am quite pleased, however, that we brought Network Rail back into public ownership as a not-for-profit organisation. It works side by side with private train operators, which is why I am suggesting an alternative model where a not-for-profit organisation is used to deliver a quality service and product to all customers. That should be the basis of what we do.
	We tend to have dogmatic and ideological debates on such matters, but at the end of the day, we often forget that Royal Mail is there to provide a service to the public. I do not think that nationalisation or public ownership are dirty words, and the intelligent way forward in this debate is to look at alternative models. Hooper made a huge mistake in dismissing alternative models that work in this country, models which are regulated, which provide a high standard of service and which provide investment for the future. The risks involved in providing water are quite huge, but through such a model, Glas Cymru is able to invest for the long term by getting guarantees. We are giving guarantees to the banks and to everyone else.
	The Treasury should look seriously at the model that I am suggesting and look at what Glas Cymru is doing. It is delivering a public service through a not-for-profit model that provides a good standard of service for the people that I represent and for all of the people of Wales. That model can be rolled out across the whole United Kingdom.

Robert Wilson: I am pleased to have the opportunity to contribute to this important debate, and I shall try to be quick because I know that others want to speak.
	In common with many areas of the country, my constituency of Reading, East has not been immune to the failings of Royal Mail. For the last couple of years, I have been involved in a campaign to prevent the local sorting office from closing. That has had an impact on workers; we are losing hundreds of jobs because of the closure. Many people have already been laid off and hundreds more have been, as they put it, left hanging in limbo. Royal Mail is moving the office to a 20 million mail centre in Swindon, and despite my best efforts to save those jobsindeed, I arranged an all-party group to see the previous Minister responsible for postal services, the hon. Member for Poplar and Canning Town (Jim Fitzpatrick)I have unfortunately been unable to put a halt to the process. I have had regular meetings with employees, and I held a surgery recently at my local sorting centre. It is clear to see the human impact of the failings of this commercial organisation, and if change does not take place, even more jobs will be lost in the years to come.
	The closure is due, in part, to the failure of Royal Mail's national management. It has failed to get a grip on many of the problems that it has faced over the past decade. In Reading, as in the rest of the country, one of those problems is the fact, mentioned by many hon. Members, that the technology used is seriously behind the times. Royal Mail chose to close its sorting centre in Reading to move to Swindon and, consequently, hundreds of people have been left out of work.
	The Hooper report, which was published at the end of last year, makes it clear that one of the principal threats to Royal Mail comes from technology and the massive explosion in digital media, the internet and mobile technology. As many have said, that has prompted a substantial decline in the number of letters being sent by consumers. Another factor is Royal Mail's outdated sorting procedures, as compared with those of other European countries. When I met the Minister responsible for postal services last year, I pressed him hard on that point. I repeat what I said to him then: modernisation is crucial to Royal Mail so that it can compete properly in the wider market that is now open to all European competitors.
	As I said, my local sorting office on Caversham road is unfortunately going to close, but I believe that the Minister probably now accepts that there is an urgent need for considerable investment in new sorting equipment. Otherwise, many other sorting offices around the country will close and more jobs will be lost.
	Poor industrial relations have dogged Royal Mail for years, and the disputes that have come about as a result are well documented. In my constituency there have been local tensions between the management and the Communication Workers Union. Such disputes are holding back Royal Mail, and I appeal to the CWU and the management of Royal Mail to stop their endless conflicts and get on with saving and modernising the business. That is clearly what most employees want.
	The most high-profile recommendation in the report is that Royal Mail should be part-privatised. The Minister seemed to get in a bit of a state about whether to admit that it will be privatised. That is recommended so that the expertise and capital investment necessary to modernise the business can be brought in. The opportunity to use that private capital and expertise will improve postal services and could give Royal Mail a new lease of life by enabling it to compete with other companies on equal terms.
	Nearly two months after the publication of Hooper's proposals, the Government are still yet to provide serious detailsthe meat on the boneof what they actually intend to do. It is about time that we began to hear their detailed plans. If we do not, there will be more damaging speculation about what the future holds and more uncertainty for the employees of Royal Mail.
	We all know that Royal Mail faces very serious challenges and is grappling with the process of modernisation. The Hooper review argued strongly that now is the time to act, and it is clear that the status quo is no longer tenable. It is time for Royal Mail to modernise, or it will face continued decline. I hope, for its own sake and that of its remaining workers in my constituency, that it is given the opportunity to thrive again.

Joan Walley: In the very few minutes that I have, I wish to make the point that an Opposition day, when the Opposition want to make political capitaldespite the situation in the Thatcher years, with which we are familiaris not the time to have a debate on such an important subject as Royal Mail and the delivery of postal services.
	I have looked carefully at the Government's amendment, and there is nothing in it that I disagree with, so I have no problem with it. However, I do have a problem with what my hon. Friend the Minister said about the direction in which we are going on the Hooper report's recommendation 13 on bringing in a private partner. That leads to the suggestion that we have partial privatisation on our hands. The hon. Member for Caithness, Sutherland and Easter Ross (John Thurso) mentioned the possibility of pre-legislative scrutiny, which might be a way of trying to deal with the current problems.
	One problem is the way in which Royal Mail has been starved of investment. As my hon. Friend the Member for Morecambe and Lunesdale (Geraldine Smith) pointed out, about 2.4 billion of profits went to the Treasury under the external financing limits. That money should have been invested in Royal Mail. The liberalisation has been carried out in haste, so Royal Mail has not properly been able to compete with European competitors, and we have been at a disadvantage.
	The problem is how to make good the legacy of the wrong decisions that have been taken in the past. Somehow we must deal with that problem and secure the long-term commitment to the universal service obligation, and we must also find the money for investment in pensions so that delivery people all over the country, including in my local office in Burslem, know that the Government are protecting and safeguarding their pensions.
	I genuinely recognise that balancing all that with the need to act quickly on the modernisation agenda will not be easy. The Government could use the Hooper report as a starting point. Negotiations could also take place with the Communication Workers Union, which in its detailed response of more than 60 paragraphs stated that it wants to work with the Government to find a way forward. However, if that way forward is bound by recommendation 13, which states that the only method of proceeding is through the private sector, I tell the Under-Secretary of State for Business, Enterprise and Regulatory Reform, my hon. Friend the Member for Dudley, South (Ian Pearson), that it is wrong way. Although we have assurances that further legislation will be introduced, and that Parliament will have an opportunity to debate it, we need to put investment in place now. My hon. Friend the Member for Ynys Mn (Albert Owen) suggested that there are other ways in which to proceed. The private sector has no monopoly on the right way to bring in expertise to transform the Royal Mail radically.
	Whatever has been said about Adam Crozier and whatever he may have done for the premier league, he has not got back to me directly about individual issues that I have raised with Royal Mail about management. We must recognise that the Government own the Post Office, and it is not good enough for Ministers to say that they cannot interfere in operational matters.
	The Hooper report, which was published in December, is already out of date. It took evidence during the credit crunch, and the easy, not very detailed recommendations that it makes about the way forward with a private sector partner are not right. I urge my hon. Friend the Under-Secretary to reconsider and involve hon. Members of all parties in finding a way forward, so that I can tell people in the Burslem delivery office that the Government are examining their needs.

Jonathan Djanogly: Let me repeat the shadow Secretary of State's earlier remark that we welcome Richard Hooper's review of the UK postal services sector. Published on 16 December, with the title Modernise or decline, it provides a worrying statement about the desperate condition of Royal Mail today. Simply, it states that the status quo is untenable. Sadly, that conclusion comes as no surprise to the Conservative party. As my hon. Friends the Members for Wealden (Charles Hendry) and for Reading, East (Mr. Wilson) noted, it confirms what we have feared for a decade: the Labour Government's negligence in failing to address the vital issues that face Royal Mail has allowed it to slip down the premier league of European postal service providers.
	We are faced with a stark choice: Royal Mail must modernise or decline. Mr. Hooper's review has at last forced the Government to accept the need for reformat least that is what we thought from Lord Mandelson's response to it, and I think that the Minister, after some interrogation, ended up taking the same view in a roundabout manner. I still do not know where the Liberal Democrats stand; I think that they sort of support the report but do not like third-party votingor something.
	However, survival alone is not what Conservative Members hope to achieve. We share Hooper's belief in having a positive future for Royal Mail if the right actions are taken. Given the urgency, why have not the Government seen fit to publish proper details of their plans? Before encouraging prompt action, we must see clear and acceptable proposals. All we currently have is a set of hollow statements by Lord Mandelson in the other place, and a promise that he would provide a full statement early this year.
	I remind hon. Members, especially the hon. Member for Stoke-on-Trent, North (Joan Walley), who strangely accused us of dithering, that we are already well into February, and yet no comprehensive details of Government policy have been released. We do not know whether Ministers fear the dissent of their own party, or whether the Government have been unwilling or unable to formulate a policy. Either way, that is indicative of a Government in disarray and lacking in direction or leadership.
	Perhaps we need to look at Labour's manifesto, in which the party commits to a publicly owned Royal Mail, or the Warwick II deal, as mentioned by the hon. Members for Morecambe and Lunesdale (Geraldine Smith), for Ynys Mn (Albert Owen) and for Stoke-on-Trent, North, to ascertain why Ministers minimise the public air time they give their part-privatisation proposals. We note the 131 Members of Parliament who signed the anti-privatisation early-day motion. However, the issue is ultimately for Labour, not us. What we are interested in is saving Royal Mail and checking that the Government have the policy, the resolve and the leadership to deliver on that. At the moment, we have no such confidence. Are they, as my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) said, buckling at the knees?
	We on the Conservative Benches understand Mr. Hooper's concern that there should be a sale of a stake to a strategic partner, so we welcome Lord Mandelson's endorsement of partial privatisation. If we are to reverse the downward-spiralling fortunes of Royal Mail, strategic outside input is, we agree, essential. However, as the hon. Member for Caithness, Sutherland and Easter Ross (John Thurso) and my hon. Friend the Member for Mid-Worcestershire (Peter Luff) said, important questions remain unanswered in relation to Lord Mandelson's vague proposals.
	What form will a partial privatisation take? How much of Royal Mail do the Government intend to privatise? What price, if any, will they charge for such a stake? Who will keep the sale proceedsRoyal Mail or the Treasury? What type of partner do the Government want for Royal Mail and will any partner be obliged to invest in the company? As my hon. Friend the Member for Wealden said, will the Government also promise that the sale process will not break down into the kind of farce that they delivered in the tender process for the Post Office card account?
	Although we support the concept of some form of outside ownership, our support for the Government's partial privatisation proposals is not unconditional. The proposals must not be just a convenient way to flog assets to prop up a Government on their last legs and desperate to reduce their debt pile at any cost. We agree with Hooper and Lord Mandelson that, in finding a solution, three interdependent aspects must be carefully considered.
	First, any new partner to Royal Mail must introduce some much-needed commercial confidence. As admitted by the Minister, at present, bureaucracy and internal conflict, which includes a long history oflet us face itterrible industrial relations, frequently paralyse Royal Mail when it comes to making decisions and bringing about change. That is particularly the case with modernisation. As the right hon. Member for Leicester, West (Ms Hewitt) pointed out, new sorting machinery is on the way, and the Royal Mail network will be subject to a review as a result. However, few at present consider that Royal Mail is equipped to bring forward such vital changes. We were pleased that the Minister accepted that outside experience will be invaluable in moving Royal Mail ahead, although we consider that a careful review of the qualifications of any third party as a strategic partner will be essential.
	Secondly, the Hooper review maintains that private investment will be required to modernise Royal Mail fully. We do not know how much that will be and we are unable to verify any figures, because the Government have refused to provide any such details. Can the Minister replying to this debate confirm that when he comes forward with privatisation proposals, he will provide details of the likely capital requirement, so that the House can properly assess those proposals?
	Thirdly, and perhaps most problematic of all, as pointed out by my right hon. and learned Friend the Member for Rushcliffe, the right hon. Member for Leicester, West and the Chairman of the Business and Enterprise Committee, my hon. Friend the Member for Mid-Worcestershire, current estimates of the pension deficit vary widely, but we all know that it is the largest problem that Royal Mail faces. Worse still, the deficit is growing, in what is a turbulent economy.
	We have voiced serious concerns about the Government's intentions in that regard. By taking over the entire responsibility for the pension scheme on an unfunded basis, the Government could quite easily raid the fund's 22 billion of assets, thereby bolstering the nation's balance sheet, which has been saddled with mind-boggling levels of debt, in the short term and piling on unknown billions of liabilities for future generations. Absolutely nothing that the Government have said today gives us any confidence about what their direction will be in that regard. I join the right hon. Member for Neath (Mr. Hain) in calling for the Government to provide their proposals, and the sooner the better.
	The Minister now needs to reassure the hundreds of thousands of postal workers who are members of the scheme that a future Government will not have the ability to strip them of their benefits. One thing is for sure: with a revaluation of the pension fund due in the near futureI think in the next month or twothe Government cannot put off dealing with the issue any longer. The consequences for working members of the scheme could otherwise be very bleak, and they would certainly not thank the Government for their continued inaction.
	So a variety of issues need to be looked at together. Mr. Hooper noted that a strategic partnership with a third party, effective regulation and the need to deal with the pensions deficit were all connected, and all necessary. We agree with his view that we cannot pick and mix between these issues, and that they need to be dealt with at the same time, although that was clearly not the view of the hon. Member for Nottingham, East (Mr. Heppell).
	My right hon. and learned Friend the Member for Rushcliffe, my hon. Friends the Members for Cotswold (Mr. Clifton-Brown) and for Wealden, and the hon. Members for Blaenau Gwent (Mr. Davies) and for Ynys Mn all pointed out that the importance of maintaining the post office network and retaining the universal service obligation was assumed in all of this. Combined, they are an essential element of our society, providing a lifeline to communities up and down the country. As Hooper's review said, they are part of our economic and social glue, but their future is inextricably linked with Royal Mail.
	Let us also keep in mind that the price control regulations are due to be revisited in 2010, which could seriously impact on the process of part-privatisation and modernisation. Royal Mail's dominance of the market ensures the need for strong regulation. The Hooper proposals for a merger of Postcomm and Ofcom are generally welcomed, although as my hon. Friend the Member for Mid-Worcestershire said, we will need to be satisfied that emphasis in the merged entity will be placed on the development of specific postal industry expertise.
	Rumours abound that legislation to enable privatisation is imminent. Will the Minister now confirm when this is going to happen? We strongly urge the Government to initiate the Bill here in this elected Chamber, and not in the other place. We believe that this elected House is best qualified to deal with matters of such importance, even if most of the Department's unaccountable Ministers sit in the other place. I am sure that that sentiment is shared by many hon. Members here.
	Royal Mail, like the Labour Government, stands on the brink. The difference, though, is clear. While redemption is beyond this Government, Royal Mail can yet recover and prosper. There is a final opportunity for the Government to revive Royal Mail instead of continuing to drag it down. We urge them to release and rapidly implement appropriate proposals, and to set Royal Mail on the course to recovery set out so comprehensively in the Hooper review.

Ian Pearson: Royal Mail and the Post Office form an important part of the social fabric of UK society, along with the universal service obligation, which the Government put into primary legislation for the first time in 2000. It is right that we have had a passionate debate on the future of Royal Mail, and I pay tribute to my hon. Friends for the contributions that they have made this evening.
	My right hon. Friend the Member for Leicester, West (Ms Hewitt) made a very brave speech. She has a great deal of experience in these areas, and she talked about the fact that far more automation was necessary in the Post Office. I absolutely agree with her about that. My hon. Friends the Members for Morecambe and Lunesdale (Geraldine Smith) and for Stoke-on-Trent, North (Joan Walley) are long-standing champions of Royal Mail and the Post Office. They hold strong views on these matters, and I want to tell them that there will be more opportunities to debate the Government's policy proposals in future.
	My hon. Friends the Members for Nottingham, East (Mr. Heppell) and for Ynys Mn (Albert Owen) also raised some important points. My hon. Friend the Member for Nottingham, East stressed the fact that the Hooper recommendations were a package. We strongly believe that this is a package of policy proposals, and that it would be wrong to pick and mix. My hon. Friend the Member for Ynys Mn mentioned Glas Cymru. In response, I want to point out that that is a monopoly water utility, rather than a company facing intense competition. The kind of business model that is appropriate for a water utility might not necessarily be appropriate for Royal Mail.
	I want briefly to refer to the Government's investment in the Post Office. We provided 2 billion to support the network between 1999 and 2006, and we are providing a further 1.7 billion to 2011, including a 150 million a year subsidy. We have made it clear that we will continue to subsidise the network beyond that time, which demonstrates the Government's commitment.
	In the remaining time available, I want to talk about the economics of Royal Mail, and then to talk about the politics. The first thing on the economics is that we believe Hooper produced a thorough report. The hon. Member for Blaenau Gwent (Mr. Davies) asked whether Hooper spoke to the posties. Yes, he certainly did on visits to UK mail centres and delivery offices, and the panel went out on rounds with postal workers. Hooper and his team also made visits abroad and saw the post at work in the Netherlands, France, Denmark, Belgium, Germany and the United States of America.
	Let us look at Hooper's numbers and the challenges to the business model that Royal Mail faces today. Hooper talked about a market decline of anything between 5 and 7 per cent.and the figures have only got worse since then. As my right hon. Friend the Member for Leicester, West said, the loss of business to digital communications is five times more than the loss to competition among other postal operators, but Royal Mail is still losing business to other such operators. The letters business made a loss last year. Royal Mail made a profit in the third quarter, but it was largely due to a European subsidiary and it came only after Government support for the business. We should contrast that with leading counterparts that are making margins of 13 to 15 per cent. on their postal business.
	It is quite clear that Royal Mail needs cash to modernise. It has a 1.2 billion commercial loan provided by the Government: half has already been spent and the other half will probably be spent in the next 12 months, but it is still not nearly enough, given the huge problems Royal Mail faces in modernising and competing in an intensely competitive environment. On top of that, as hon. Members have noted, there is an enormous pension deficit, valued at 4.9 billion in March 2008and, as we know, most asset classes have seen a severe decline since that period, so the pension deficit can only get substantially worse. Hooper also forecasts that from 2009-10 onwards, there will be a 400 million a year cash-flow deficit. With what we know now and from what has happened since Hooper reported, the situation is, as I have said, only going to get worse.
	If we accept that doing nothing is not an option, we have to ask ourselves what is the best option for the Government to pursue. How can we maintain the universal service obligation; how do we fund the business and its pensions deficit in the future; and how do we modernise the business to put it on a sustainable footing?

Jonathan Djanogly: Will the Minister give way?

Ian Pearson: No, I want to continue and answer those questions in the time available to me. Let me explain my views on those questions. We have to ask what is the right thing to do for consumersthe people and businesses that use Royal Mailand what is right and fair for Royal Mail's work force. Do we, as taxpayers, want to address the pensions deficit? We have said, as a Government, that we do, but the Opposition have been strangely silent on that issue. Should taxpayers totally fund the likely future deficits of Royal Mail, which could rise above 500 million a year for the foreseeable future?
	Personally, I would not rule out some sort of share participation by the Royal Mail work force, but I do not think it is in its long-term interest to set its face against bringing in private capital through a minority partnership. That is why the Government's policy is to support the proposals in the Hooper report. As I say, we intend to make proposals for discussion.

Several hon. Members: rose

Ian Pearson: Let me talk about the politics. The right hon. and learned Member for Rushcliffe (Mr. Clarke) wasas alwaysbrutally honest about his failures as a Minister. He was not able to deliver private capital to Royal Mail when he was responsible for postal affairs: he said quite clearly that he was overruled by Margaret Thatcher.

Several hon. Members: rose

Ian Pearson: I give way to my hon. Friend the Member for Linlithgow and East Falkirk (Michael Connarty).

Michael Connarty: I am grateful to my hon. Friend. If he had heard the opening speech by the right hon. and learned Member for Rushcliffe (Mr. Clarke), he would know that the right hon. and learned Gentleman pointed out that although he was a big beast supported by Tarzan, Mrs. Thatcher would not privatise the Post Office because she knew that that would be a death blowa suicide notefor the Conservatives.
	Having heard this afternoon's speeches, I will not be voting for the Conservative motion and I will not be voting for the Government's amendment. I urge Members not to allow this part-privatisationwith what was, in fact, just an offer of further share options from the junior Ministerto proceed.

Ian Pearson: I was merely expressing my own view that such an option should not be ruled out. My hon. Friend will have heard the figures that I gave. He will understand the position that Royal Mail is in. A pensions deficit that was valued at 5.9 billion nearly 12 months ago will in fact be substantially worse, and the projected 400 million annual deficit for the foreseeable future can also only get worse. We need to sort out the position; the question is, what is the best way for us to sort it out? Would it be best to sort it out purely through Government money, or to bring in private-sector capital in the form of a minority shareholding while retaining existing expertise and management?

Dan Norris: Will my hon. Friend give way?

Ian Pearson: I have only two or three minutes before the guillotine falls.
	I want to be as brutally honest as the right hon. and learned Member for Rushcliffe. We do have problems discussing this issue in the Labour party: there is clearly a difference of opinion, and it would be wrong for us not to reflect that by debating the issue. However, I do not think that an Opposition day debate that is being used opportunistically by the Conservative party is the appropriate vehicle for such a discussion.
	We, as a Government, have always made clear our wish to maintain the universal service obligation and to do the right and fair thing by the Royal Mail work force and by the United Kingdom taxpayer, who is a consumer of the service and is also being expected to fund it. Let me pose this question to my right hon. and hon. Friends: should the Government fund the whole of Royal Mail for everthe pensions deficit, the other ongoing deficits and the requirements for modernisationor does it make sense to bring in some private sector capital and expertise? That is a question that we must continue to debate in the future, although we are not making decisions on it tonight. The Government will present policy proposals shortly.
	I appreciate Members' concerns, but let us discuss them openly and honestly. Royal Mail's future poses a real structural problem, because of the changing business world in which it operates. Let us be frank about that, and try to find the best way in which to sort it out.

Question put (Standing Order No. 31(2)), That the original words stand part of the Question.
	 The House divided: Ayes 151, Noes 376.

Question accordingly negatived.
	 Question put forthwith (Standing Order No. 31(2)), That the proposed words be there added.
	 The House divided: Ayes 309, Noes 208.

Question accordingly agreed to.
	 The Deputy Speaker declared the main Question, as amended, to be agreed to (Standing Order No. 31(2)).
	 Resolved,
	That this House notes the threats to the future of the Royal Mail and welcomes the conclusion of the Hooper Report that, as part of a plan to place the Royal Mail on a sustainable path for the future, the current six days a week universal service obligation (USO) must be protected, that the primary duty of a new regulator should be to maintain the USO, and that the Government should address the growing pensions deficit; notes that modernisation in the Royal Mail is essential and that investment must be found for it; endorses the call for a new relationship between management and postal unions; urges engagement with relevant stakeholders to secure the Government's commitment to a thriving and prosperous Royal Mail, secure in public ownership, that is able to compete and lead internationally and that preserves the universal postal service; further notes the Conservatives' failure to invest in Royal Mail when they were in power in contrast with Labour's support for both Royal Mail and the Post Office; and notes that legislation on these issues will be subject to normal parliamentary procedures.

Business without Debate

DELEGATED LEGISLATION

Motion made, and Question put forthwith (Standing Order No. 118(6)),

Constitutional Law

That the draft Welsh Ministers (Transfer of Functions) (No. 2) Order 2008, which was laid before this House on 16 December, be approved. (Ms Butler.)
	 Question agreed to.
	 Motion made, and Question put forthwith (Standing Order No. 118(6)),

Contracting Out

That the draft Contracting Out (Highway Functions) Order 2009, which was laid before this House on 21 January, be approved. (Ms Butler.)
	 Question agreed to.

European Union Documents

Motion made, and Question put forthwith (Standing Order No. 119(11)),

Asylum

That this House takes note of European Union Documents No. 16913/08 and Addenda 1 to 3, draft Directive laying down minimum standards for the reception of asylum seekers, No. 16934/08 and Addenda 1 to 3, draft Regulation on the establishment of 'EURODAC' for the comparison of fingerprints for the effective application of the Regulation establishing the criteria and mechanisms for determining the Member State responsible for examining an application for international protection, and No. 16929/08 and Addenda 1 to 3, Regulation establishing the criteria and mechanisms for determining the Member State responsible for examining an application for international protection lodged in one Member State by a third country national or stateless person; supports the Government's aim of making more efficient the arrangement for identifying the Member State responsible for determining a claim for international protection (and, where appropriate, for removing to that country the person applying for protection); and supports the Government's aim of ensuring that minimum standards for the treatment of those seeking protection in the EU support the maintenance of an effective asylum system that grants protection to those who need it and identifies and swiftly returns those who do not. (Ms Butler.)
	 Question agreed to.

USE OF THE COMMONS CHAMBER (UNITED KINGDOM YOUTH PARLIAMENT)

Motion made,
	That this House welcomes the work of the United Kingdom Youth Parliament in providing young people with an opportunity to engage with the political process and bring about social change; notes that many hon. Members from all parts of the House are actively involved in the work of the UK Youth Parliament; and accordingly resolves that the UK Youth Parliament should be allowed for this year alone to hold its 2009 annual meeting in the Chamber of this House . (Ms Butler.)

Hon. Members: Object.

IMMIGRATION RULES (SMALL BUSINESSES)

Motion made, and Question proposed, That this House do now adjourn. (Ms Butler.)

Christopher Chope: Thank you, Mr. Speaker, for selecting this subject for debate. As will become apparent, much of what I shall say concerns one particular firm in my constituency. I hope that the result of the pressure put on the Government to address the issue will be the saving of 80 jobs in my constituency that would otherwise have been strangled as a result of Government red tape and regulation. Indeed, the debate will be a test of whether the Government are true to their avowed word of being intent on offering real help for businesses as expressed by the Secretary of State for Business, Enterprise and Regulatory Reform in his letter of 9 February, which was distributed to all Members of this House.
	In that letter, the Secretary of State said:
	During these difficult times, the Government is committed to doing everything it can to help UK companies and prevent the loss of people's jobs.
	My application for this debate emanated from the failure of the Government to respond adequately, or at all, to the letter that I sent to the Secretary of State on 10 December last year about a problem created by the Government with regulatory changes imposed on customers of European Skybus flight training.
	In more than 13 years of existence, Skybus has successfully dry leased flight simulator equipment to more than 80 foreign airlines, Governments and militaries. The company has links with the Minister's Department to establish Skybus's eligibility to trade with various different airlines and countries around the world. It has links with the Metropolitan police on security over ID and passport checking, and that often takes place hourly and affects every person who enters the training centre to fly or even to observe in a flight simulator. The company also supplies flight simulator equipment for use in anti-terrorist training by the Metropolitan police and is very proud of its contributions to both overseas trade and national security. The simulator dry leasing business for foreign airlines represents 85 per cent. of the company's business. In my letter to the Secretary of State, I pointed out how changes in Government regulation were adversely affecting the business of Skybus with two overseas companies in particular, Transaero from Moscow and IranAir.
	Changes to the immigration rules meant that previous procedures whereby names of airline crew members were provided, letters of invitation issued and UK business visas obtained were invalidated. The next stage saw applications being delayed and visas were sometimes issued too late to be of any use. When they were issued, they were of only four weeks' duration in contrast to the previous system of six or 12 months. Members of airline crew attending for standard recurrent training were faced with substantial additional bureaucratic hurdles before they could access Skybus services.
	In the case of IranAir, individuals were required to stand in a queue for personal application. Obviously, that was highly inconvenient for air crew employed by that airline company who had to be removed from their scheduled flying responsibilities merely to apply for a visa. I asked the Secretary of State to intervene to ensure that the increasing bureaucracy around UK visa entry did not result in the inability of companies such as European Skybus flight training to continue to operate successfully.
	Despite making chasing telephone calls and tabling a written question and an oral question, I did not receive a response until this morning when an e-mail was sent to my office to which was attached a letter from the Minister, intriguingly backdated to 9 February. The letter does not provide a solution, unfortunately, because it is based on the false premise that European Skybus flight training is eligible for accreditation under new rules for student visitors that commence at the beginning of March.
	The UK Borders Agency had advised that the solution for Skybus was to register with the Department of Innovation, Universities and Skills, and at the end of January that registration was completed and a reference number was provided. However, it has since become obvious to the accrediting authorities that Skybus does not fit their criteria, because it is engaged in the dry leasing of simulator equipment and not in the instruction of pilots on that equipment. Therefore, although the DIUS reference number will suffice for visa applications made before the beginning of March, it will not work thereafter because Skybus will be unable to comply with the new rules about student visas.
	As a result of the pressure placed on the Government by the knowledge that they have to answer this debate, the dilemma facing Skybus has doubtless been recognised. Unfortunately, however, a solution has still not been provided; I hope that the Minister will provide one this evening. Today I spoke to Mary Batchelor of the UK Border Agency; she is, I believe, briefing the Minister. She has told me that the matter now has to be checked with lawyers to see whether a possible solutionthat she has in mind, but has not disclosed to mewill work. She forecast that the Minister would be able to offer a decision within days, and I hope that she meant within hours.
	This evening, I seek nothing less than a guarantee from the Minister of not only a decision but a solution. Eighty jobs in my constituency depend on that, as does the credibility of the Government's policy. It is not Government policy to undermine the work that Skybus does, but that is the consequence of the various regulatory changes that have been made and which have already had such an adverse impact on Skybus's customers, who do not experience anything like the same problems in using simulator services in France or Spain.
	At a time when the value of our currency has been greatly devalued by Government action, the firm should be getting a competitive advantage. However, it is not because of the bureaucratic problems that I have described. The name of the Department for Business, Enterprise and Regulatory Reform contains all the buzz wordsbusiness, enterprise and regulatory reform. However, from this case it is apparent that even the constituency correspondence has not been handled in a businesslike fashion. It is clear that the consequence of the changes in regulation has been to undermine enterprise and that all the talk of regulatory reform, regulatory impact assessments, small business litmus tests and all the rest, has counted for nothing in the scenario that I have described.
	It is truly intolerable that a successful business such as Skybus should be threatened with extinction because of the Government's failure to practise what they preach. When the immigration rules were last amended, they contained an assertion that there had been an assessment of whether they had an adverse impact on small business and it was said that they would not. So there has been a regulatory impact assessment, but it was obviously based on a false premise.
	I hope that the Minister will be able to explain what Skybus customers need to do to be able to carry on coming to this country and using the simulator equipment in Christchurch on the Bournemouth airport complex. I fear that this is but one example of the impact on many other small businesses of changes in the immigration rules. As I prepared for this debate, I received representations from other small companies hoping that I would take up their cases for them. I am not doing that except in the sense that I am trying to get the Minister to accept that the changes were not properly thought through, particularly in respect of their impact on different groups of organisations. It is manifestly absurd to try to force a company that is not an educational establishment into the straitjacket of accreditation with DIUS and then into trying to obtain accreditation from an organisation such as Ofsted.
	The solution, it seems to me, is for customers who wish to use the flight simulation facilities to be able to obtain business visas in the same way that they were able to before. The Minister is making an expression that suggests he is uncertain whether that is the solution. Unfortunately, I am not in government, but he is, and he is therefore in a positionindeed, under an obligationto provide a solution to a problem that the Government have created. I hope that we will hear something positive from him.

Phil Woolas: I congratulate the hon. Member for Christchurch (Mr. Chope) on securing this debate. Let me start by saying that this is a good example of how our parliamentary system works for the best, in that a constituentor in this case a company in his constituency, European Skybus flight trainingcan raise a matter with the Member of Parliament, who can raise it with the Government in the House to bring the matter to Ministers' attention, as he successfully has. I hope to be able to provide a solution to the problem for him. I have always been a supporter of the idea of a single-Member constituency, whether across party lines or not. This is not a partisan issue. The hon. Gentleman is rightly trying to protect his constituent, and I am happy to try to help.
	I have, of course, looked into the background to this case. The hon. Gentleman wrote to my right hon. Friend the Secretary of State for Business, Enterprise and Regulatory Reform on 10 December and received a reply from the Under-Secretary of State, my hon. Friend the Member for Dudley, South (Ian Pearson), dated 9 February. I am pleased that he got a reply before this debate. The system works in wonderful ways. I do not think that it is cause and effect, but he has his reply, so that is good. The reply outlines part of the solution that he wants to take forward. To be fairas I always am, I hope, to other Government Departmentsthis is a matter primarily for my Department and I take responsibility for finding the solution that he looks for.
	As a result of the information that we now have, the UK Border Agency is looking afresh at the immigration position of persons coming to the UK for training in techniques and work practices used here where solely training facilities are involved and no teaching is provided. I will be trying to give the hon. Gentleman a satisfactory answer very quickly, and I am confident that I will be able to do so. The additional information has been helpful, and officials have spoken to European Skybus flight training.
	To reassure the hon. Gentleman that we are not the bureaucratic blunderers that he has sometimes accused us of being, I have looked into the situation in his constituency, and it is a good situation. Four companies have received a licence under the new scheme, another is under consideration, and another has been refused. I am happy to share the details with him should he so choose. Let me emphasise that our approach with companies is not to act in a policing way. If people are refused, we have mechanisms in place to help them. We do not approach this in a heavy-handed way at all. We are trying to help our businesses.
	We are also, of course, trying to introduce a new immigration system. Consequences are inevitable if one makes a radical change to a system, and this is the biggest shake-up in the immigration system since Empire Windrush arrived in 1947I genuinely think that that is the case given the introduction of e-borders and the points-based system. Some would say that we are taking too long to implement it, but it is a big change and we are taking our time to get it right. I hope that the hon. Gentleman would be charitable enough to say that when one makes a big change in public policy, there are unintended consequences. That is why it is right that the House can debate such issues, and that right hon. and hon. Members can bring matters to the attention of the Executive, or the individual Minister concerned, which the hon. Gentleman has done.
	This is the most radical reworking of the immigration rules for a generation, even if one does not accept my time scale. We have created a clear, defined and targeted points-based system that allows a fair, transparent and objective set of rules for decisions, which will improve compliance and reduce the scope for abuse. I know that the hon. Gentleman supports those goals in immigration policy. I and my colleagues have attempted to build a consensus across the House on those principles; he has supported them and I am grateful for that.
	We have increased control over migrants entering the United Kingdom, especially those from outside the European Union. We now have greater flexibility to respond to UK skills shortages. In the current economic circumstances, it is more important than ever that we can decide on the number of highly skilled and temporary workers we need and on the sectors of the economy that need them, so we have set up this new superstructure. Under the old regime, the employer had to apply to the Home Office for a work permit for each individual migrant that they wished to employ. Even if that were approved, the migrant would have to apply separately for entry clearance, which might be refused, leaving the employer to start all over again. Under the new points-based system, an employer issues a certificate of sponsorship to a migrant worker who then applies for entry clearance overseas. If that is granted, the migrant can travel to the UK and begin work straight away.
	We are particularly keen to reduce the burdens of the system on small businesses, which is why the example that the hon. Gentleman highlighted is quite important when ensuring that we get the system right. With that keenness to reduce burdens in mind, we issue a small charge to small businesses, as well as to charities, of 300 for sponsorship, as opposed to the 1,000 charge for larger companies. There is evidence of a strong take-up of that system. By the beginning of this month, almost half the applications decided were submitted by small businesses. I would have expected a greater proportion of large businesses, but that has proven not to be the case.
	Where necessary, employers will need to undertake resident labour market tests to ensure that no British or EU national could be found for advertised posts before an offer of employment is made to an overseas national. We are asking businesses to take an active role in ensuring compliancewe are now coming to the detail that relates to the problem encountered by the hon. Gentleman's constituents. We require UK organisations of any size to apply for a licence in order to bring migrants to the UK to work or study and if granted, sponsors are given a rating of A or B. The A rating is given when they comply, and a B is given when they need a little help in order to do so. That backs up my point about the system not being heavy-handed. So far, we have issued just under 10,000 licences. We are meeting our commitment to processing complete applications within six weeks and we intend to reduce that time to four weeks by April this year.
	I mentioned that six licence applications have been received from the hon. Gentleman's constituency, and I am happy to repeat that four companies from Christchurch sit on the sponsored register as A-ratedin other words, no problems. A further application is under consideration and one has been refused. The particular case that he highlighted falls into a category that, frankly, was not fully understood when the rules were drawn up.
	We are trying to prevent abuse and prevent the system from being subject to clandestine illegal immigration. There is no suggestion whatever that that is happening in the case of European Skybus flight training. As I understand itthe hon. Gentleman will correct me if I am wrongit comes down to the fact that the people involved are primarily coming for the purpose of training that is related to the service that the company offers. As a result of the information that he and the company have provided, we are looking afresh at the immigration position of persons coming to the UK for training in techniques and work practices used here, where only training facilities are provided and no teaching. It is a matter of definition.
	It is incumbent on me to say to the hon. Gentleman that we will make a decision very shortly. He asked for more than a decisiona solutionand I am confident that I will be able to give him one. I understand his point, and I hope to provide such a solution to him and to others in a similar situation. He has highlighted a problem that has arisen, but he will know from his experience as a Minister that sometimes, in providing a solution to a specific problem, one creates a general problem for others. I do not want to be back here in three months' time responding to further Adjournment debates as a result of another unintended consequence. That is why I do not want to take a snap decision; I want to find him a solution, but I do not want to do so immediately, just in case there is a consequence that I have not foreseen.

Christopher Chope: I am grateful to the Minister for what he has said, but may I impress upon him the urgency of the case that I mentioned? If the solution that is provided necessitates obtaining accreditation from one of the organisations that have been mentioned, the company has been informed that that process might take up to three months. If so, not only will it have lost the business that it should have had in January, it will probably not have business in March, April or May. The situation is urgent.

Phil Woolas: I thank the hon. Gentleman for that point. I shall give him a decision next week, and I hope to give him a solution. Perhaps we could talk about the matter and try to solve the problem, but I do not wish to take a decision and then find out through correspondence that it has made the situation worse. I have been a Minister long enough to know that that sometimes happens, as has he. The best thing that I can do for him and his constituents is to guarantee to get them a decision next week, and say that we hope to find a solution. At this point, the best thing for me to do is shut up and sit down.
	 Question put and agreed to.
	 House adjourned.